Suozzi, Schumer press IRS to overturn ruling on Suffolk septic system grants
James Minet, left, is joined by Suffolk County Executive Steve Bellone and James' father Robert Minet as they watch a septic system being installed in front of their Nesconset home on Aug. 20, 2015. Credit: James Carbone
ALBANY — Rep. Tom Suozzi and Sen. Chuck Schumer are pressing the Internal Revenue Service to overturn its ruling that Suffolk County residents will have to pay tax on grants they received under a county program to offset the cost of upgrading their septic systems.
The IRS ruled that those residents will have to pay federal tax on grants of $10,000 to $20,000 to upgrade septic tanks and replace cesspools under a county program to protect Long Island’s water quality. Homeowners voluntarily joined the program before they knew the grants would be treated as income under the Jan. 15 IRS ruling.
The IRS said the grants will count as taxable income for some of the nation’s highest taxed residents, even if homeowners never receive a check. In most cases, the county pays grant money directly to contractors who install the systems, officials said.
The ruling could undermine County Executive Steve Bellone’s incentive program to install septic systems to reduce nitrogen pollution in waterways.
“For years, Long Island has experienced a decline in water quality in part due to nitrogen runoff,” Suozzi said Tuesday. “Cesspools and septic systems have been identified as the largest single cause of degraded water quality contributing to beach closures, restrictions on shell fishing, toxic algae blooms, and massive fish kills.”
Suozzi (D-Glen Cove) wrote IRS Commissioner Charles Rettig that the taxation is a threat to the Suffolk County Septic Improvement Program. “I strongly oppose this decision as it undermines the program’s mission,” Suozzi wrote Rettig.
Schumer (D-N.Y.), the U.S. Senate's minority leader, said the IRS got the issue “flat wrong.”
“The local program is a win-win for Suffolk homeowners and the environment,” Schumer said. “Homeowners, and Suffolk County, are already taxed by nitrogen — they shouldn’t also get a bill from the IRS for trying to reduce it. Uncle Sam isn’t losing out on a dime when a Suffolk homeowner participates in this grant program, because the local contractors are already paying the tax — it’s just that simple."
An IRS spokesman didn’t immediately respond to a request for comment.
Officials estimate there are at least 360,000 cesspools and aging septic systems in Suffolk. Since the county grant program began, the county has disbursed 293 grants and expended $3 million, officials said.
Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.
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