Most people who received money from Norfolk South following last year’s fiery train derailment In eastern Ohio, people no longer have to pay taxes on millions of dollars in aid payments.
The tax authority said Wednesday that most payments made to people living near East Palestine, Ohio, to help them pay for temporary housing or replace their belongings are not taxable because of the February 3, 2023 derailment that forced thousands of people to vacate their homes be described as an “event of a catastrophic nature”.
The railroad estimates that it has paid out more than $21 million to residents following the derailment. The amount is part of the more than $107 million in total relief it has offered to communities affected by the catastrophic train crash.
The fact that residents were told they would have to pay taxes on the money from the railroad was a sore spot for people who are still fighting to recover from the derailment.
“I don’t know why they didn’t do this from the beginning,” said Misti Allison, an East Palestine resident. “The IRS decision is a positive step in the right direction, but in the grand scheme of things, it’s insignificant. I really hope President Biden follows through on his promise that the government will make right what Norfolk Southern ‘cannot make right.'”
The residents are considering whether to buy a share in a Settlement in class action lawsuit amounting to $600 million Norfolk Southern has agreed to or opted out of this agreement, allowing them to file their own lawsuits. Later this month, they will announce the outcome of the National Transportation Safety Board investigation into the derailment at a hearing in East Palestine. The safety authority had previously stated that the accident was probably caused due to an overheated bearing on one of the wagons, which was not detected by the sensors on the track in time to prevent the derailment.
U.S. Senator Sherrod Brown of Ohio said it should not have taken so long for the IRS to realize that the derailment was a disaster.
“This is a long overdue step – the people of Eastern Palestine should never have had to pay taxes for the assistance they needed after the train derailment,” Brown said.
Norfolk Southern also praised the IRS’s decision.
“We are proud of the investments we have made in East Palestine and commend the IRS for its actions to exempt residents from an additional federal tax burden,” the railroad company said in a statement.
The IRS said some payments would be taxable if they were lost income, payments to businesses or payments by the railroad company for access to property during ongoing cleanup efforts.
Residents who have already filed their taxes before the normal April 15 deadline must correct their returns and request a refund of the taxes they paid on payments to the railroad.