Congressman Kanjorski Announces Tax Relief for FEMA Payment Recipients

WASHINGTON - Congressman Paul E. Kanjorski (PA-11) today announced that funding from the Federal Emergency Management Agency's Flood Mitigation Assistance Program is now tax-exempt. The U.S. House of Representatives passed H.R. 1134, which excludes FEMA mitigation payments from taxation, and the President today signed the legislation into law.  

"When the people of Northeastern Pennsylvania are enduring the aftermath of flooding, whether it is from heavy rains or a tropical storm, the federal government has the obligation to do everything it can to provide assistance. Making people pay tax on the money given to help them is unacceptable. This legislation will alleviate the financial burden that additional taxes impose on flood victims as they seek assistance to rebuild their homes and protect them from future damage. I hope this reversal encourages residents who were affected by the recent flooding to take advantage of the Flood Mitigation Assistance program," Congressman Kanjorski said.

The FEMA Flood Mitigation Assistance (FMA) program allocates money for flood prevention efforts, including structure elevation and buyout of flood-damaged homes. 

The Internal Revenue Service last year ruled that FEMA payments made to property owners who had experienced damage from flooding or other disasters would be considered taxable income. H.R. 1134 reverses that ruling.

From October 2003 through January 2005, property owners in the state of Pennsylvania received more than $5 million from the FMA Program. Pennsylvania taxpayers who included FEMA mitigation payments as income on their 2004 tax return are advised to file an amended return.

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