Saturday, November 25, 2006

A Truly Coordinated Recovery Effort

"Grants may have IRS calling"--If you claimed losses on your 2005 federal income tax form, your Road Home grant may be subject to federal income tax:
But the Internal Revenue Service says Road Home recipients who claimed a storm loss on their taxes last year should count the grants as income on their federal tax returns this year. That means some people will be thrown into lofty tax brackets they never dreamed of -- and pay more taxes too.

Not everyone will be hit with a higher tax bill. But the extra "income" could erode tax exemptions long enjoyed by some filers, such as some of those on Social Security, and force them to pay a fee for the government's largesse. [Is "largesse" the right word for what's going on here on the ground? Maybe the contractors who got big, no-bid contracts felt the "government's largesse"...]

"This is salt on the wound," said Gerard Schreiber Jr., a certified public accountant who estimated that thousands of people will be affected. "I think a lot of people out there thought the Road Home money was outright tax-free, but there are tax consequences. There are a lot of CPAs out there having problems explaining this to people."

Schreiber said he was recently giving a talk in St. Bernard Parish and members of the audience were irate when he told them about the tax implications of the Road Home grants. "One screamed, 'First we were screwed by FEMA. Now we are being screwed by the IRS,' and ran out the door," he said. [emphasis added]

An estimated 169,000 homes in Louisiana suffered major flooding in Hurricanes Katrina and Rita last year. Many homeowners -- the IRS says it doesn't yet know how many -- sought to recoup some of their losses when they filed their 2005 federal income taxes by claiming a casualty loss, which reduced their tax burden or augmented their refund.

In some cases, filers were able to recoup income taxes paid over the previous three years and put money in their pockets at a time when they had lost their homes and possessions.

The lack of coordination seems/feels willful. (You can't expect traumatized people, or a traumatized region, to be coldly logical and even-tempered.) Another blow--like finally getting to the permits office and finding out you have to pay a fee for every square foot of damage and that when the 6-month permit expires, you have to get another permit and pay the fees again. From what I have heard. No one has fears of correcting me so I expect clarification/correction in less than 10 hours. Maybe 10 minutes.

1 Comments:

Anonymous E.J. said...

Are you serious? They are going to make people reapply for permits? I think it would be safe for them to assume that if a home were >50% damaged before, it still is.

Mon Nov 27, 07:29:00 PM  

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