{ "id": "R41323", "type": "CRS Report", "typeId": "REPORTS", "number": "R41323", "active": false, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 372214, "date": "2010-10-14", "retrieved": "2016-04-07T01:25:45.052063", "title": "Tax Issues and the Gulf of Mexico Oil Spill: Legal Analysis of Payments and Tax Relief Policy Options", "summary": "The explosion of the Deepwater Horizon oil rig and subsequent oil spill into the Gulf of Mexico has led to substantial damages, particularly in the form of lost wages and income. BP has begun to make interim payments to compensate for lost income resulting from the oil spill. Individuals and businesses impacted by the oil spill may file a claim with the Gulf Coast Claims Facility, an independent entity established to administer the claims, with payments coming from an escrow account funded by BP. The tax consequences of these payments to the recipients will depend on the nature of the underlying claim. Payments received for lost wages or income will generally be taxable, while payments for other types of claims, such as physical injury or damage of property, may qualify for exclusion or deferral.\nGiven the magnitude of the economic disruption resulting from the spill, however, policymakers may consider exploring alternative mechanisms for providing relief to the affected region. In the past, Congress has used the tax code as a tool to provide relief to disaster victims. While the Gulf of Mexico oil spill has not been classified as a federally declared disaster, the tax code could be used as a mechanism for delivering additional relief. Tax policy options that could be explored include added casualty loss deductions, an extended net operating loss (NOL) period, employment incentives, enhanced access to retirement savings, and incentives for charitable relief. \nSimilar policies were adopted following past disasters. However, the oil spill in the Gulf of Mexico presents lawmakers with unique challenges in using the tax code to provide relief. First, the oil spill is not a natural disaster. The oil spill is the result of human action where, unlike a natural disaster, compensation may be recovered from a financially responsible party. Second, the nature of the damages is different from those typically borne by victims of natural disasters. Specifically, damages may primarily be in the form of lost business income and employment, rather than direct property loss. Relief that has been awarded in the past, such as tax filing extensions to assist with the destruction of taxpayer records, is not likely to be an issue. Finally, if the goal is to provide relief or assistance to the poor, the tax code may not be the best policy instrument.\nLegislation has been introduced in the House and Senate that would provide tax relief to the Gulf Coast oil spill victims. The Oil Spill Tax Relief Act of 2010 (H.R. 5598) would require that any compensation provided by BP to an oil spill victim be treated as a qualified disaster payment, and thereby excluded from gross income for tax purposes. The Gulf Coast Access to Savings Act of 2010 (H.R. 5602) would allow for enhanced access to retirement savings. The Gulf Oil Spill Recovery Act of 2010 (H.R. 5699) would make various tax relief measures available to businesses and individuals. Similar to H.R. 5699, the Gulf Coast Oil Recovery Zone Tax Relief and Economic Recovery Act (S. 3934) would provide various forms of tax relief for businesses and individuals in the affected region.", "type": "CRS Report", "typeId": "REPORTS", "active": false, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R41323", "sha1": "bcb72b74519b7b42416fec692a62d004209d65f3", "filename": "files/20101014_R41323_bcb72b74519b7b42416fec692a62d004209d65f3.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R41323", "sha1": "d53700d87cb071523698b4a4f0e61279837a5821", "filename": "files/20101014_R41323_d53700d87cb071523698b4a4f0e61279837a5821.pdf", "images": null } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc491474/", "id": "R41323_2010Oct14", "date": "2010-07-15", "retrieved": "2015-01-27T19:40:46", "title": "Tax Issues and the Gulf of Mexico Oil Spill: Legal Analysis of Payments and Tax Relief Policy Options", "summary": "This report provides analysis of various policy options for providing tax relief to oil spill victims, highlighting the circumstantial differences between previous natural disasters and the current oil spill. The report concludes with a brief summary of current legislative efforts.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20100715_R41323_6d129002c4b4e2f43b920ae599604a04deb75898.pdf" }, { "format": "HTML", "filename": "files/20100715_R41323_6d129002c4b4e2f43b920ae599604a04deb75898.html" } ], "topics": [ { "source": "LIV", "id": "Water pollution", "name": "Water pollution" }, { "source": "LIV", "id": "Oil pollution", "name": "Oil pollution" }, { "source": "LIV", "id": "Taxation", "name": "Taxation" }, { "source": "LIV", "id": "Tax policy", "name": "Tax policy" }, { "source": "LIV", "id": "Emergency management", "name": "Emergency management" }, { "source": "LIV", "id": "Disaster relief", "name": "Disaster relief" }, { "source": "KWD", "id": "Gulf of Mexico", "name": "Gulf of Mexico" } ] } ], "topics": [] }