IRS TAXES FAMILIES OF LOWER-MANHATTAN

Nov 15, 2002
Press Release

NEW YORK: In response to the shocking IRS decision today to tax a portion of federal 9/11 grants to individuals and families in lower-Manhattan, Congresswoman Maloney made the following statement:

"This makes no sense - with one hand the government gives help to New Yorkers after 9/11 and now with the other hand they are trying to take some of it away. The House majority should be passing my bill to fix this," said Congresswoman Carolyn Maloney in a statement today.

To view the IRS's decision, please go to:

https://www.irs.ustreas.gov/newsroom/article/0,,id=97322,00.html 

BACKGROUND:

Inexplicably, on November 7, 2002, the IRS decided to tax 9/11 recovery grants for small businesses in lower-Manhattan. Congresswoman Carolyn Maloney (NY), who had organized Congressional letters to the IRS opposing the idea of a tax on the grants, called the decision "a body blow for New York's recovery" and "an insult to those who suffered so much from the economic impacts of the terrorist attacks."

On September 30, 2002, after reports surfaced that the IRS was considering a tax on federal grants to small businesses and individuals in lower-Manhattan who suffered economic impacts from 9/11, New York Reps. Maloney, Elliot Engel, Jose Serrano, Gary Ackerman, Steve Israel, Ed Towns, and Greg Meeks sent a letter to U.S. Treasury Secretary Paul O'Neill and IRS Commissioner Charles O. Rossotti urging that they immediately declare the over $1 billion in aid, tax exempt. The letter to O'Neill and Rossotti can be viewed in full at https://maloney.house.gov/sites/maloney.house.gov/files/documents/olddocs/Sept11/93002IRS.pdf 

 Senators Schumer and Clinton took similar action.

On October 8, 2002, it was reported that the IRS had decided not to tax residents of lower-Manhattan for recovery about $281 million in grants, but had yet to make a decision on the small business grants of approximately $772 million.

On October 10, 2002 Maloney and several other New York Lawmakers introduced legislation to protect lower Manhattan businesses and residents from having to pay any taxes on 9/11 recovery assistance (HR 5624 - the "September 11th Assistance Tax Clarification Act"). While Congressman Rangel, ranking-Democrat of the Ways and Means Committee, has asked his committee to allow the legislation to go to the floor for a vote, the Republican House leadership has not taken action. New York State Assembly speaker introduced separate legislation as well, to exempt the grants from city and state taxes, no matter what the IRS decision would be.

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