August 12, 2014 — The Internal Revenue Service, in a statement nearly as vague as those from other state and federal agencies, says that fishermen receiving the $32,500 in fishery disaster funds may have to pay federal tax on that relief assistance if it’s used to replace lost income.
The federal taxing authority, in a written statement that fell far short of providing any true clarity into the formal IRS position, said the taxable nature of the funds will depend on how the beneficiaries of disaster assistance use the money.
“The IRS has not previously issued published guidance on the taxability of this specific law’s disaster relief payments,” the IRS said in the statement provided three weeks after the initial request by the Gloucester Daily Times for its position on the taxable nature of the direct financial assistance contained in the $75 million in fishing disaster aid Congress appropriated in January. “Generally, it will depend on the purposes for which the relief money was paid. Normally, if money is paid to replace lost income, those payments would be taxable.”
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