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Fire victims receive tax relief

Bill awaits governor’s signature

By Chris Rooney

Good news has been hard to find since wildfires ravaged the region in 2017, but a glimmer of hope was announced last week when California legislators approved Assembly Bill 1249. The bill, awaiting Governor Gavin Newsom’s signature — he’s indicated he supports it — would provide relief to fire victims getting settlements from the Fire Victim Trust.

AB 1249 pertains to state taxes, while another bill at the federal level is currently stalled in the Ways and Means Committee. The fact that the state bill passed unanimously with bipartisan approval offers encouragement for the federal version.

“Victims deserve to receive the maximum amount of compensation possible from PG& E, especially since the trust is underfunded and not able to pay victims their full claims,” Assemblymember James Gallagher (R-Yuba City), who pushed the bill at its final stages, said in a press statement.

AB 1249 adjusts California’s tax code to allow all types of filers to be excluded from paying state taxes on advance settlements paid out of the trust. The Fire Victim Trust was created to compensate victims of the 2015 (Butte), 2017 (North Bay), and 2018 (Camp) wildfires through the PG& E bankruptcy case and court negotiations.

Currently, survivors are only receiving 45 percent of their settlements and remain uncertain how much more will be forthcoming. PG& E stock would need to be sold at a significantly higher price than it is going for now to fully fund 100 percent of the settlements made to survivors who filed claims. Some survivors have not yet received offers or payments from the Fire Victim Trust.

Some survivors represented by attorneys are already paying 15 to 35 percent of their trust settlement payments to legal representatives. The state and federal taxes to be paid on the settlement were another financial burden that cut into the amount of the settlement survivors can use to actually rebuild or relocate.

The tax relief is a brief respite from ongoing bad news for fire victims. After enduring the travesty of wildfire itself, fire victims have faced staggering rebuild costs, sketchy contractors who took advantage of the circumstances, a dubious trust settlement based on PG& E’s stock value, and peripheral costs, such as inflated fire insurance premiums.

Fire victims who received partial payments from the Fire Victim Trust walked into a rude surprise earlier this year when they learned that the funds were subject to being taxed. A number of fire victims said their troubles were only doubled by having vital rebuild funds decimated by taxes. They will be now able to adjust their tax declarations.

According to the California Department of Forestry and Fire Protection (CalFire), the Nuns Fire burned 56,566 acres; destroyed 1,355 structures; damaged an additional 172 structures; and caused three fatalities. The fire was contained on Oct. 30, 2017, and, at the time, was California’s ninth most destructive fire in history. The fire burned in portions of Sonoma and Napa Counties and was the primary fire in Sonoma Valley during those devastating October days.

The Tubbs Fire, ravaging Sonoma County at the same time as the Nuns Fire and, at the time, the most destructive wildfire in California history, burned parts of Napa, Sonoma, and Lake Counties, inflicting its greatest losses in the city of Santa Rosa. The Tubbs Fire was one of more than a dozen large fires that broke out in early October 2017, simultaneously burning in eight Northern California counties in what was called the “Northern California firestorm.” By the time it was contained on Oct. 31, the fire was estimated to have burned 36,810 acres and was blamed for at least 22 deaths in Sonoma County. Its destructiveness was surpassed just a year later by the Camp Fire of 2018.

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