LaMalfa introduces expanded bill to exempt wildfire payments from federal taxes 

Today, Congressmen Doug LaMalfa and Mike Thompson introduced the Protect Innocent Victims Of Taxation After Fire Act, an expanded version of their bill to shield thousands of fire victims from having to pay federal income taxes on compensation they receive as disaster aid for losses and damages suffered during a wildfire. This protection would cover payments made from the Fire Victim Trust, a $13.5 billion wildfire settlement for nearly 70,000 victims of the 2018 Camp Fire, 2017 North Bay Wildfires, and the 2015 Butte Fire.

“Camp Fire survivors have waited long enough to have tax clarity,” LaMalfa said. “I believe that these changes will make this essential legislation easier to incorporate into a larger disaster relief or tax package. This initiative has been a top priority and it has gathered broad bipartisan support. Congress must be timely and enact this bill into law to get wildfire survivors the financial certainty they need.”

“No wildfire survivor should ever pay taxes on compensation to which they’re entitled,” said Thompson. “I have worked closely with Representative  LaMalfa, the Joint Committee on Taxation, the Ways and Means Committee and Congressional leadership to ensure that we swiftly pass legislation protecting survivors from taxation. The revised bill I introduced today with Rep. LaMalfa is a simplified, retroactive approach that protects our communities – and this tax relief remains my top priority in Congress. I am optimistic Congress will advance this critical provision this year.”

Earlier this year, LaMalfa and Thompson introduced H.R. 176, a similar version of this legislation which was designed only to cover the Fire Victim Trust claimants. The bill introduced today has been expanded to remove requirements that limited payments to settlement trust funds, thereby expanding protection to anyone receiving disaster aid payments to reimburse wildfire-related losses, including Zogg Fire victims in Shasta and Tehama counties, as well as fires in Colorado and Arizona. The updated language also represents bipartisan agreements between the House and Senate committees that oversee tax policy.

Last year, the Congressmen were nearly able to secure passage through inclusion in the Fiscal Year 2023 government funding package, before all tax-related provisions were removed by the Senate because of a disagreement on other, unrelated tax policies.

Congressmen LaMalfa and Thompson were joined in introduction by R Katie Porter, Jimmy Panetta, Julia Brownley, Kevin Kiley, Tom McClintock and Dan Newhouse.