WASHINGTON, D. C. - East Palestine residents won’t pay taxes on most of the payments they received from Norfolk Southern after a train derailment spilled toxic chemicals in the community last year.
The Internal Revenue Service and Treasury Department are categorizing most assistance payments and reimbursem*nts as disaster relief that will be exempt from most taxes, U.S. Sen. Sherrod Brown announced on Wednesday.
Brown said he asked IRS and the Treasury Department for the payments to be tax exempt. He said the tax-exempt assistance includes inconvenience payments from Norfolk Southern, along with reimbursem*nts for relocation, home repairs, medical expenses, and replacement clothes and household items.
“This is a long overdue step – the people of East Palestine should never have had to pay taxes on assistance they needed in the wake of the train derailment,” said a statement from Brown.
In a Wednesday notice, IRS said that payments to businesses, lost wages, and access payments to property owners to allow for cleanups will not be tax exempt.
It said that any taxpayer who has already filed their 2023 tax return and reported their qualified disaster relief payments as taxable can amend their return, report the exclusion and claim any refund of taxes paid, by filing Form 1040-X.
Those who have not yet filed their 2023 return don’t need to report qualified disaster relief payments on their tax return, even if reported to them on Form 1099-MISC. It stressed that taxable payments must be reported.
The Feb. 3, 2023 derailment in East Palestine spilled toxic chemicals such as vinyl chloride, butyl acrylate, ethylhexyl acrylate, and ethylene glycol monobutyl ether. Federal and state officials, fearing the vinyl chloride tanks would explode, set them afire in a “controlled burn,” creating a massive plume of thick black smoke. Other chemicals seeped into local streams, killing fish and traveling down into the Ohio River. Federal investigators later said there was no scientific basis for the controlled burn.
The derailment forced thousands of people to evacuate East Palestine. Those who live near the site say they continue to experience strange illnesses that they believe are connected to the toxic chemical release, describing symptoms like rashes, nosebleeds and upper respiratory problems.
Agencies like the U.S. Environmental Protection Agency and Ohio EPA say their testing hasn’t found unsafe chemical levels in the area’s air, water or soil.
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Norfolk Southern last month agreed to pay $310 million to settle a lawsuit filed by the U.S. Department of Justice over the derailment disaster.
A settlement agreement filed in federal court in Akron, includes a $15 million civil penalty and requires Norfolk Southern to pay for health monitoring and mental health services for residents and long-term environmental monitoring. It also requires the company to improve rail safety, protect nearby waterways and pay for the cost of the federal government’s cleanup efforts.
The railroad also agreed in April to pay $600 million to settle a class action suit that would resolve claims by businesses within a 20-mile radius of the derailment site and personal injury claims by residents who live within a 10-mile radius.
Earlier this year, the head of the National Transportation Safety Board said the deliberate burn of rail cars carrying hazardous chemicals wasn’t needed to avoid an explosion because the rail cars were cooling off before they were set on fire. NTSB Chair Jennifer L. Homendy told Vance at a Senate Committee hearing that Norfolk Southern’s contractors lacked a scientific basis to support their conclusion the burn was needed.
A statement that Norfolk Southern released after the hearing said the incident commander at the site made the final decision to conduct a controlled release, with input from multiple stakeholders, including Norfolk Southern and local, state, and federal authorities.
Sabrina Eaton writes about the federal government and politics in Washington, D.C., for cleveland.com and The Plain Dealer.
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