IRS ruling harms Suffolk residents
Suffolk County Comptroller John Kennedy speaks during a debate against incumbent Suffolk County Executive Steve Bellone at the Bay Shore-Brightwaters Public Library on Sept. 21, 2019. Credit: Danielle Silverman
The latest battle in the forever war waged between John Kennedy and Steve Bellone now has a whole bunch of new casualties — Suffolk County residents whose tax bills are going to get bigger.
Kennedy, the Republican county comptroller, started this mess. He decided to seek a ruling from the Internal Revenue Service ruling on whether homeowners should pay federal taxes on county grants to help them make costly upgrades to failing septic systems — a program begun by Bellone, the Democratic county executive, to help reduce nitrogen from the region’s waters.
No one but Kennedy was clamoring for such a ruling. He began sending tax forms to alarmed homeowners in earnest in 2018, long before the ruling arrived earlier this year. However, two other entities with similar longer-running programs — the state of Maryland and the upstate Catskill Watershed Corp. — made the decision with no subsequent controversy to send the tax forms to the companies paid to install the high-tech septic systems, not the homeowners who receive them.
Thanks to the IRS ruling, both homeowners and installers will continue to get tax forms from Kennedy.
The comptroller cited several defenses for seeking the IRS ruling. Bellone and his administration say Kennedy’s actions were politically motivated; he tried unsuccessfully to unseat Bellone in last year’s election.
If there is a ray of good news here, it’s that despite Suffolk County’s warnings to homeowners interested in enrolling in the program that the grants — which range from $10,000 to $20,000 — could be subject to federal income taxes, those homeowners are applying in ever-increasing numbers. Applications in 2019 dwarfed those in 2018, and 2020 so far is outstripping 2019.
Now it’s incumbent on Bellone, Kennedy, other local officials and our federal elected representatives to come up with a way to protect homeowners from the higher taxes, whether it’s through a tax credit, some other tweak in the federal tax code, a restructuring of the program to make sure only the installers are liable for taxes, or something else.
Let’s not lose sight of the real war here — the essential effort to reduce nitrogen pollution in our waters. Winning that battle would be a victory for everyone.
— The editorial board
