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Lawmakers Seek IRS Clarity on Taxing State Utility Assistance

OCT. 19, 2021

Lawmakers Seek IRS Clarity on Taxing State Utility Assistance

DATED OCT. 19, 2021
DOCUMENT ATTRIBUTES
  • Authors
    Garamendi, Rep. John
    Thompson, Rep. Mike
    Torres, Rep. Norma J.
    Schiff, Rep. Adam B.
    Barragán, Rep. Nanette
    Aguilar, Rep. Pete
    Brownley, Rep. Julia
    Chu, Rep. Judy
    Costa, Rep. Jim
    DeSaulnier, Rep. Mark
    Eshoo, Rep. Anna G.
    Gomez, Rep. Jimmy
    Huffman, Rep. Jared
    Khanna, Rep. Ro
    Lee, Rep. Barbara
    Lieu, Rep. Ted
    Lowenthal, Rep. Alan S.
    McNerney, Rep. Jerry
    Panetta, Rep. Jimmy
    Roybal-Allard, Rep. Lucille
    Swalwell, Rep. Eric
  • Institutional Authors
    U.S. House of Representatives
  • Subject Area/Tax Topics
  • Jurisdictions
  • Tax Analysts Document Number
    2021-39976
  • Tax Analysts Electronic Citation
    2021 TNTF 202-14

October 19, 2021

The Honorable Charles P. Rettig
Commissioner
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC 20224

Dear Commissioner Rettig:

We write to express concerns about the potential tax implications of the provision of utility assistance to Californians through the American Rescue Plan Act's Coronavirus State and Local Fiscal Recovery Funds. We request that you provide guidance to prevent unnecessary tax burdens for many Californians in need as we recover from the economic impact of the COVID-19 pandemic.

Many states and local governments have expressed interest in issuing utility assistance to households or populations facing negative economic impacts due to COVID-19, in accordance with the Department's interim final rule. California is using a portion of its $27 billion allocation to provide $993.5 million in assistance for electric and natural gas customers under the California Arrearage Payment Program and $985 million in assistance for water and wastewater customers under the California Water and Wastewater Arrearage Payment Program. Both programs will assist residential and commercial customers.

However, the State, as well as the agencies and utilities tasked with implementation, have expressed concern that they would be required to report such assistance as income to the Internal Revenue Service (IRS). We believe that taxing utility assistance provided through fiscal recovery funds would be inconsistent with the exemption of tax liability under other COVID-19 relief programs like economic impact payments and emergency rental assistance, as well as other long-standing utility assistance programs.

Households already facing the adverse economic impacts of the pandemic should not have to worry whether receiving utility assistance would result in additional tax liability or a decrease in other tax benefits. Additionally, without immediate action, the provision of such assistance to those most in need could be delayed unnecessarily as agencies manage these tax implications.

We appreciate the IRS's attention to this matter and ask that you work swiftly to provide clarity to those carrying out and receiving assistance through these programs. Thank you for your continued partnership in supporting a strong, equitable economic recovery.

Sincerely,

John Garamendi
Member of Congress

Mike Thompson
Member of Congress

Norma J. Torres
Member of Congress

Adam B. Schiff
Member of Congress

Nanette Diaz Barragán
Member of Congress

Pete Aguilar
Member of Congress

Julia Brownley
Member of Congress

Judy Chu
Member of Congress

Jim Costa
Member of Congress

Mark DeSaulnier
Member of Congress

Anna G. Eshoo
Member of Congress

Jimmy Gomez
Member of Congress

Jared Huffman
Member of Congress

Rho Khanna
Member of Congress

Barbara Lee
Member of Congress

Ted W. Lieu
Member of Congress

Alan S. Lowenthal
Member of Congress

Jerry McNerney
Member of Congress

Jimmy Panetta
Member of Congress

Lucille Roybal-Allard
Member of Congress

Eric Swalwell
Member of Congress

DOCUMENT ATTRIBUTES
  • Authors
    Garamendi, Rep. John
    Thompson, Rep. Mike
    Torres, Rep. Norma J.
    Schiff, Rep. Adam B.
    Barragán, Rep. Nanette
    Aguilar, Rep. Pete
    Brownley, Rep. Julia
    Chu, Rep. Judy
    Costa, Rep. Jim
    DeSaulnier, Rep. Mark
    Eshoo, Rep. Anna G.
    Gomez, Rep. Jimmy
    Huffman, Rep. Jared
    Khanna, Rep. Ro
    Lee, Rep. Barbara
    Lieu, Rep. Ted
    Lowenthal, Rep. Alan S.
    McNerney, Rep. Jerry
    Panetta, Rep. Jimmy
    Roybal-Allard, Rep. Lucille
    Swalwell, Rep. Eric
  • Institutional Authors
    U.S. House of Representatives
  • Subject Area/Tax Topics
  • Jurisdictions
  • Tax Analysts Document Number
    2021-39976
  • Tax Analysts Electronic Citation
    2021 TNTF 202-14
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