The IRS on Wednesday confirmed previous reports by the Gulf Coast Claim Fund: that payments for lost wages, profits and business income resulting from the BP oil spill are taxable.
Therefore, the IRS said, it’s important that people, if possible, budget for the tax liability on their payments from the claims fund.
Payments made in 2010 are payable from 2010 taxes, which are due April 18. Tax filings are normally due April 15, but because that is a Washington D.C. holiday – Emancipation Day – so everyone across the country is being given an extra three days for the tax filing deadline.
Payments from the Gulf Claim Fund made in 2011 would be paid on 2011 taxes, which are due in April 2012.
Dee Harris Stepter, spokeswoman for New Orleans IRS office, said the agency is encouraging people to check with their tax preparers in detail about the effect of compensation from the BP oil fund.
For those struggling with payment and collection issues, she suggested paying as much as possible by the April 18 deadline to minimize penalties and interest. For unpaid balances, Stepter said people can work out payment plans with IRS. People with questions can contact a Gulf oil spill tax assistance line: 1.866.562.5227.
People who need free tax assistance can contact their local IRS office. Also, the Volunteer Income Tax Assistance (VITA) sites are providing assistance. The tax assistance program is for people who earn $49,000 a year or less.
To locate a VITA site, call 1.800.906.9887.
The most recent data from the Gulf Coast Claims Fund, financed with a $20 billion payment from BP, shows that 124,095 individuals have received claims checks averaging $11,378.