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IRS Exempts Ohio Residents from Taxes on Norfolk Southern Derailment Compensation


Most of the people who got money from Norfolk Southern after last year’s fiery train accident in eastern Ohio won’t have to pay taxes on the millions of dollars they got.

Most of the money that people near East Palestine, Ohio, got to help pay for temporary housing or replace their belongings isn’t taxable, the Internal Revenue Service said Wednesday. This is because the derailment on February 3, 2023, that forced thousands of people to leave their homes was “an event of a catastrophic nature.”

As part of the more than $107 million it has given to towns affected by the terrible train crash, the railroad says it has paid more than $21 million to residents since the derailment.

Residents were upset that they were told they had to pay taxes on the railroad money. They are still trying to get back on their feet after the accident.

Misti Allison, who lives in East Palestine, said, “I don’t know why they didn’t do that from the start.” “The IRS decision is a good thing, but it’s not very important in the big picture.” I really hope that President Biden keeps his word that the government will make up for what Norfolk Southern “cannot make whole.”

Folks are debating whether to take a piece of the $600 million settlement Norfolk Southern agreed to for a group of lawsuits or back out of the deal so they can file their own cases. They will be able to hear the National Transportation Safety Board’s report on the derailment at a meeting in East Palestine later this month. The safety board had earlier said that the crash was probably caused by one of the railcars’ bearings getting too hot, which wasn’t caught by monitors on the track in time to stop the derailment.

Ohio U.S. Sen. Sherrod Brown said it shouldn’t have taken the IRS this long to figure out that the accident was a bad idea.

Brown said, “This is a long overdue step. The people of East Palestine should never have had to pay taxes for help they needed after the train derailed.”

Norfolk Southern also said nice things about the IRS ruling.

According to a statement from the railroad, they were proud of the investments they had made in East Palestine and praised the IRS for taking action to help locals avoid having to pay more federal taxes.

Some payments, like those for lost income, payments to companies, or payments the railroad made to get access to land while the cleanup was going on, would be taxed by the IRS.

People who filed their taxes before the normal deadline of April 15 will need to make changes to their returns and ask for a refund for the taxes they paid on train payments.

Source – AP News

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