October 19, 2018

Sens. Warren, Markey & Reps. Tsongas, Moulton Work to Ensure Tax Exemptions for Those Affected by Merrimack Valley Gas Explosions

Lawmakers call on Treasury Department and Massachusetts Department of Revenue to designate the Merrimack Valley gas explosions a disaster

Letter to Treasury Department (PDF) | Letter to MA Department of Revenue (PDF)

Washington, DC - United States Senators Elizabeth Warren (D-Mass.) and Edward J. Markey (D-Mass), along with Representatives Niki Tsongas (D-Mass.) and Seth Moulton (D-Mass.), today sent letters to Treasury Secretary Steven Mnuchin and Massachusetts Department of Revenue Commissioner Christopher C. Harding urging them to ensure that residents and businesses in the Merrimack Valley in Massachusetts would not be required to pay federal taxes on disaster relief payments they received for damage caused by recent gas explosions.

The letter comes after natural gas explosions started as many as 70 fires in Lawrence, Andover, and North Andover, Massachusetts last month, damaged or destroyed dozens of homes, and left thousands of residents and businesses without gas service. One person was killed and twenty-five people were injured as a result of the disaster, which has been linked to natural gas distribution pipelines operated by the Columbia Gas of Massachusetts, a NiSource subsidiary.

In response to the explosions, the Greater Lawrence Relief Fund was established to help the Massachusetts residents whose lives were disrupted by the disaster. Columbia Gas has donated $10 million to the relief fund and will directly compensate victims who make claims. An estimated $850,000 has reportedly been raised from other sources.

In their letters to Secretary Mnuchin and Commissioner Harding, the lawmakers urged the officials to designate the gas explosions as a "qualified disaster" in order to ensure that disaster relief payments from the relief fund or Columbia Gas to impacted Massachusetts residents are not taxed. Federal tax law and the Massachusetts Revenue Code both exempt relief payments from taxation if government considers the event "of a catastrophic nature" and if funds are used to reimburse families for expenses incurred as a result of the disaster.

"The gas explosions in the Merrimack Valley meet both of these definitions of qualified disaster," the lawmakers wrote. "Thousands of individuals were temporarily displaced, suffered significant property damage to homes or appliances, and have been left without gas service for months. The Governor has declared a state of emergency and state resources have been deployed to help affected residents, including the Massachusetts National Guard. As Secretary, I ask that you immediately use your authority to designate the Merrimack Valley gas explosions as a disaster so that families attempting to recover have certainty that they will not be taxed when receiving the disaster assistance they so desperately need."