WASHINGTON, DC November 18, 2021 – Following a push by U.S. Senators Alex Padilla and Dianne Feinstein (both D-Calif.), The Internal Revenue Service (IRS) announced that water and energy assistance will be provided through American Rescue Plan Act will not be treated taxable as income.
“We are pleased that the IRS listened to our concerns and welcome this clarification. This decision will help ensure that our COVID assistance helps rebuild our economy in a more equitable and equitable manner,” the senators said. “Californians who are already struggling to make ends meet during the pandemic need not worry about whether receiving aid for supplies will count as taxable income or make them unable to receive other tax benefits.”
In their letter to the IRS commissioner, senators highlighted California’s efforts to use federal funds from American Rescue Plan Act to provide utilities assistance to households or populations facing negative economic consequences due to COVID-19. California is using part of its $ 27 billion allocation to provide $ 993.5 million in assistance to electricity and natural gas customers and $ 985 million in assistance to water and wastewater customers. Both programs will help private and business customers.
Senators Padilla and Feinstein strongly supported financial recovery funding for state, local, tribal and territorial governments and its inclusion in American Rescue Plan Act, which they voted to adopt and were signed by President Biden on March 11, 2021.
In addition, Senator Padilla helped secure a new pilot program for the two-party Environmental Protection Agency Act on Infrastructure Investments and Jobs, the pilot program for rural and low-income drinking water assistance, which will address affordability by providing direct financial assistance and debt relief to water systems that predominantly serve low-income households.