Rep. Zeldin Champions Bipartisan Legislation To Reverse IRS Ruling Taxing Suffolk Residents For Septic System Upgrade Grants
PATCHOGUE, NY – Congressman Lee Zeldin (R, NY-1), member of the House Financial Services Committee, joined Congressman Tom Suozzi (D, NY-3) in championing legislation (H.R. 7280), 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.
“When it comes to hardworking Long Islanders’ taxes, there has been too much shooting from the hip. We must protect these taxpayers, and this complex issue requires an effective solution,” said Congressman Zeldin. “This program’s goals are laudable, but we must ensure people can actually use the program to achieve those goals. While all levels of government work to find a solution, due to the urgency of this situation, we are running the gamut on every option, including 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. 7280 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.