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Floor Speech
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Mr. PADILLA. Mr. President, I rise to introduce the bipartisan Protect Innocent Victims of Taxation After Fire Extension Act. This legislation would extend and make permanent the tax relief that Congress has provided for individuals and families that have received compensation for losses and damages suffered during a wildfire.
The Protect Innocent Victims of Taxation After Fire Extension Act would make permanent the exclusion of certain qualified wildfire relief payments from gross income, including compensation for losses, expenses, or damages, such as compensation for additional living expenses, lost wages, personal injury, death, or emotional distress.
It would also allow taxpayers to claim the exemption in the year they receive payments rather than have to file, for a refund. This will provide more immediate and much needed certainty to wildfire survivors. It would also ensure that future recipients of wildfire-related settlements are able to use the entire sum of compensation towards the intended purpose of rebuilding.
Unfortunately, utility-caused fires are becoming increasingly common, meaning more States now have qualifying settlements or active litigation related to such disasters.
Congress acknowledged the fact that wildfire survivors should not be subject to the financial uncertainty of not knowing how much of their claims will be made available for recovery when it passed the Federal Disaster Tax Relief Act, P.L. 118-148, which included my bill to create this exclusion. This is a policy that passed the Senate with unanimous consent.
Unfortunately, this exclusion will expire at the end of the 2025 calendar year, which means any settlement payments beginning in 2026 will again be subject to Federal income tax obligations. The Protect Innocent Victims of Taxation After Fire Extension Act will make this exclusion permanent so that we might provide at least some sense of certainty to all who have suffered devastating losses.
I would like to thank Senators Lummis, Wyden, and Sheehy for introducing this bill with me in the Senate, and I would like to thank Representatives LaMalfa and Thompson for leading this bipartisan legislation in the House. I hope my colleagues will join us again in supporting this bill to ensure wildfire victims receive full and proper compensation to help rebuild their lives and communities. ______
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