Just in time for Christmas, the thousands of people who lost their homes and businesses or suffered other damage in the 2017 North Bay wildfires, and a year later in the wildfires in of Butte County, again declined.

When government agencies and insurance companies settled with PG&E, they made money. Individual victims, lacking the political muscle of major institutions, were forced to accept a settlement that included a large chunk of PG&E stock — and the market’s risk.

Yes, the victims chose to settle, but they were warned that they might get nothing if they didn’t agree to a mix of money and savings.

That was in 2020. Thirty months later, tens of thousands of victims are still awaiting payment, and the Fire Victims Trust — the group created to administer the settlement — is paying claims at 45 cents on the dollar as PG&E stock slows. to regain weight.

Now, with Congress preparing to adjourn, Rep. Mike Thompson confirmed Monday that Senate negotiators have allowed tax relief for victims of the $1.7 trillion spending bill to fund the US government through September.

The spending bill would prevent another government shutdown and update the Election Counting Act, the law that governs the counting of votes for presidential elections.

That’s good news, but it’s another blow to victims in California.

At issue is the IRS’s treatment of fire payments.

Federal tax law generally treats jury awards and other civil settlements as taxable income. The receiver can deduct some expenses, but like most everything else in tax law, it gets complicated. The bottom line for victims is that their residences are subject to federal taxes. Thompson said the tax could chew up $636 million of the $13.5 billion construction fund.

We think this is very unfair.

The victims were not hit by the storm. They lost their homes, businesses and properties. Claims are based on the difference between what victims receive from their insurers and the cost of repairs. They also have legal fees from their attorneys, and these expenses are not deductible. It is also a tax payment.

No one will be saved by the settlement, even if the Fire Victims Trust can pay more than 45 cents on the dollar in the end.

The California legislature recognized the unfairness of the arson tax and drafted an exemption from the tax code.

Thompson, D-St. Helena, introduced legislation to provide equal treatment to federal tax laws, sponsored by Rep. Jared Huffman, D-San Rafael, and Rep. Doug LaMalfa, R-Richvale. Senator Dianne Feinstein introduced a co-sponsored measure in the Senate.

California lawmakers have been working to include their proposals in a spending bill, with the final bill not expected before the end of Monday, but Thompson said the leadership of GOP in the Senate Mitch McConnell opposed all the income tax provisions of the bill. This is an expensive product for the victims.

Around 51,000 people have received settlement money, according to figures published by the Fire Victims Trust. If Congress doesn’t act now, many of them will be looking at the tax bill in 2023 – on top of the losses they’ve already suffered. Thousands of other victims can expect the same when they reach their homes.

Congress still has time to act this year. Disaster relief in Northern California is not a gift. It’s fair play.

You can send a letter to the editor letters@pressdemocrat.com.



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