Press Release
Posted:
Washington – Today, Representative Mike Thompson (CA-04) announced that the Internal Revenue Service (IRS) has released guidance for qualified wildfire survivors applying for tax relief under Thompson’s bipartisan Federal Disaster Tax Relief Act of 2023. The guidance can be found here.
“Federally declared wildfires in 2015, 2017, and 2018 devastated entire communities across our district and across the state of California. Entire towns were destroyed. Thousands of people lost homes, and dozens of people lost their lives.
“My work to deliver tax relief to these survivors didn’t end when President Biden signed my bill into law in December. I worked with my colleagues to urge the IRS to issue guidance to those applying for relief and today is another step in ensuring survivors get the relief they need and deserve.”
BACKGROUND
The Federal Disaster Tax Relief Act supports the nearly 70,000 qualified survivors who suffered significant losses during three major federally declared California fires in 2015, 2017, and 2018 who have received related settlement payments.
Many California wildfire survivors have already been taxed on their settlement payments, with some even losing access to certain federal benefits as a result of their compensation wrongly being considered income.
Rep. Thompson introduced the original legislation to provide tax relief to qualified wildfire victims in the 117th Congress and worked to advance the legislation ever since.
Last Spring, Rep. Thompson and Rep. Greg Steube (FL-17) led a bipartisan group of 218 Members of Congress to successfully advance a discharge petition which forced House Speaker Mike Johnson to bring the Federal Disaster Tax Relief Act to the House floor for a vote. The historic advancement of Rep Thompson and Rep. Steube’s petition marked only the third time a House discharge petition had succeeded in the 21st Century. Their efforts succeeded as the Federal Disaster Tax Relief Act passed the Senate and was signed by President Biden at the end of 2024.
The Federal Disaster Tax Relief Act excludes from taxpayer gross income, for income tax purposes, any amount received by an individual taxpayer as compensation for expenses or losses incurred due to a qualified wildfire disaster (a federally declared disaster declared after 2014 as a result of a forest or range fire). It also excludes relief payments for losses resulting from the East Palestine, Ohio, train derailment on February 3, 2023 and designates Hurricane Ian, among other federally declared disasters, as a qualified disaster for the purposes of determining the tax treatment of certain disaster-related personal casualty losses.