Yuba-Sutter Times

The U.S. Senate has passed H.R. 5863, the Federal Disaster Tax Relief Act, which includes a significant provision from Congressman Doug LaMalfa's bill, H.R. 4970, known as the Protect Innocent Victims of Taxation After Fire Act. This legislation aims to exempt wildfire relief payments from federal income taxes and simplify the process for deducting losses from various natural disasters.

Once enacted into law, taxpayers will have the opportunity to claim refunds for any taxes paid on wildfire settlement funds since 2020 by filing an amended return or claiming the change in the next tax year.

Congressman LaMalfa expressed his satisfaction with the passage of this bill: “I’m glad that we finally got this bill passed, and I appreciate the patience of the people who have waited over two years for this passage. It’s essential that we deliver the tax relief that our constituents need in the wake of disasters."

The legislation is designed to ensure that those affected by wildfires retain more of their financial resources after legal fees and other expenses. LaMalfa added, "This legislation ensures the IRS doesn’t steal what’s left after the blood-sucking attorney’s fees so that individuals affected by disaster have every available dollar to recover and rebuild."

The new provisions allow eligible taxpayers to file amended returns up to a year after enactment instead of being limited to three years after originally filing a tax return. Additionally, it protects recipients from losing benefits such as Covered California premium subsidies and VA co-pay assistance due to misinterpretation of disaster relief as income windfall.

An estimated $512 million in taxes is expected to be returned to wildfire victims and survivors under this act. The provisions apply not only to Fire Victim Trust claimants but also cover any wildfire payments received between 2020 and 2025 for federal wildfire disasters occurring after 2014.

Congressman Doug LaMalfa represents California's First Congressional District, which includes several counties such as Butte, Colusa, Glenn, Lassen, Modoc, Shasta, Siskiyou, Sutter, Tehama, and Yuba.