Rep. Zeldin Calls for House Passage of Bipartisan Bill To Reverse IRS Ruling Taxing Suffolk Residents For Septic System Upgrade Grants | Congressman Lee Zeldin

Rep. Zeldin Calls for House Passage of Bipartisan Bill To Reverse IRS Ruling Taxing Suffolk Residents For Septic System Upgrade Grants

April 23, 2021
Press Release

WASHINGTON – Congressman Lee Zeldin (R, NY-1), member of the House Financial Services Committee, is an original cosponsor of H.R. 2711, which would undo a ruling by the Internal Revenue Service (IRS) that Suffolk County residents are liable to pay taxes on county grants used to upgrade their aging septic tanks. 

“The goals of this program are laudable, but we need to ensure people can actually use the program to achieve the desired standards,” said Congressman Zeldin. “Saddling Long Islanders with an unexpected bill come tax season is unacceptable, and we must stop shooting from the hip when it comes to their hard-earned tax dollars. All levels of government must work to find a solution, however we must explore every option possible to address this urgent issue, including reintroduction of this legislation to provide immediate relief.”

In 2017, Suffolk County initiated the Septic Improvement Program, which provided grants for homeowners to replace old septic systems that discharge nitrogen pollution. In January 2020, the IRS ruled that these grants would be taxable to the homeowner as gross taxable income. Throughout this process, Congressman Zeldin has continued to work with both the IRS and Suffolk County to mediate a solution for Long Island taxpayers.

H.R. 2711 would:

  • Exclude from gross income any subsidy “provided (directly or indirectly) by a State or local government to a resident of such a State or locality for the purchase or installation of any waste management measure, but only if such measure is with respect to the taxpayer’s principal residence;”
  • Define the Wastewater Management Measure as “any installation or modification of property primarily designed to manage wastewater (including septic tanks and cesspools) with respect to one or more dwelling units;” 
  • Retroactively allow subsidy recipients to amend their 2019 tax returns for grants received in 2019.