[Congressional Record Volume 151, Number 58 (Thursday, May 5, 2005)]
[Extensions of Remarks]
[Page E893]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  INTRODUCTION OF THE SEPTEMBER 11TH ASSISTANCE TAX CLARIFICATION ACT

                                 ______
                                 

                        HON. CAROLYN B. MALONEY

                              of new york

                    in the house of representatives

                         Thursday, May 5, 2005

  Mrs. MALONEY. Mr. Speaker, today I 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.
  Despite a prior announcement by the IRS they were planning to exempt 
Lower Manhattan residents from most, if not all taxes, on Federal 
Grants given to them to recover from 9/11 or grants given as incentive 
to move to or stay in the area, the IRS has made a determination to tax 
aid received. A February 5, 2003 letter received by the Acting 
Commissioner, Bob Wenzel, stated the following:

       The legislation enacted in 2001 and 2002 that appropriated 
     $2.7 billion of CDBG funds to aid in the recovery of New York 
     City did not provide that the grants made from those funds 
     were exempt from income tax. In addition, neither the Victims 
     of Terrorist Attacks Relief Act of 2001 nor the Liberty Zone 
     Benefits provision of the Job Creation and Workers Assistance 
     Act of 2002 specifically exempted the grant payments from 
     income tax. Therefore, we have had to apply existing general 
     federal tax law principles to determine the tax status of the 
     grants.

  As incredible as it sounds, the IRS will tax this assistance unless 
we act. It was never the intention of this Congress to tax any of this 
money and it is time to pass this legislation to prevent this unfair 
and unjust tax.

                          ____________________