IRS wants taxes from BP payments for lost wages

[DJ13]

– 2 hrs 4 mins ago

WASHINGTON – The Internal Revenue Service says oil spill victims who receive BP payments for lost wages will have to pay up come tax time.

Under current law, BP payments for lost wages are taxable — just like the wages would have been, the IRS said in tax guidance issued Friday. Payments for physical injuries or property loss, however, are generally tax free. Payments for emotional distress? Taxable, though medical expenses related to the emotional distress are deductible.

BP officials have agreed to create a $20 billion fund for spill victims, as well as a $100 million fund to support displaced oil rig workers.

The IRS issued the guidance Friday to help spill victims sort through the law's complexities. The agency has posted tax information for oil spill victims on its website and plans to hold forums in seven Gulf Coast cities on July 17 to help victims with tax troubles or questions.

"As residents of the region cope with the evolving situation, I want to assure them that the IRS will be doing everything it can to provide tax help to those who need it," IRS Commissioner Doug Shulman said. "We encourage anyone who has an issue with the IRS to contact us and explain their hardship, and we will work with them to find a solution."

http://news.yahoo.com/s/ap/20100625/ap_on_bi_ge/us_gulf_oil_spill_taxes

:eyes:

[KT2000]

1. that sounds fair

wages are taxed for everyone.

[PufPuf23]

2. Time of National Emergencies - Ecological, War, Economic

is time for blatant and confiscatory taxation of individuals at the top of the economic ladder.

This is so obvious.

Ture criminals get off and desperate and abandoned individuals are at the least payees and at worse criminalized.

[housewolf]

3. Of course they do

You have to pay income taxes on unemployment, so of course they're going to tax any sort of wage-replacement.

[proud2BlibKansan]

4. Unemployment benefits are taxed

This is only fair.

[FBI_Un_Sub]

5. It's gross income

[tammywammy]

6. It's income, of course you'd have to pay it.

I'm glad the IRS is out there getting the word out so people won't be surprised come tax time.