Gulf Oil Spill Payments
Many taxpayers in the Gulf Coast region received payments in 2011 related to the oil spill. However, claims have also been paid to taxpayers residing outside of this region. According to current law, oil spill payments for lost wages or business income are taxable. The law treats compensation for lost wages or income differently for tax purposes than compensation for physical injuries or property loss, which generally is nontaxable. Refer taxpayers with issues such as casualty losses to a professional tax preparer.
For guidance in providing assistance to Gulf oil spill victims, refer to Publication 4906, Gulf Oil Spill Overview & Guidance for VITA/TCE, and Publication 4899, Decision Tree — Gulf Oil Spill Affected Taxpayers.
For additional guidance, including frequently asked questions, visit the Gulf Oil Spill Information Center on www.irs.gov for the most up-to-date information. Additional information can also be found in: