Last week, Congressmen Doug LaMalfa (R-Richvale) and Mike Thompson (D-St. Helena) introduced legislation that would exempt thousands of fire victims, who are receiving compensation from the Fire Victim Trust, from having to pay federal income tax on their settlement money. Additionally, the legislation would prevent survivors from having to pay taxes on the attorney fees included in the settlement. These fees account for roughly 30% of the compensation, meaning that without this legislation survivors would be taxed on money that their attorneys keep. The Trust is a $13.5 billion settlement established in July 2020 for survivors of the 2015 Butte Fire, the 2017 North Bay Wildfires, and the 2018 Camp Fire. Although the deadline to file 2021 taxes is April 18, 2022, this legislation would allow survivors to be awarded their exemption retroactively.
