Residents of East Palestine and Darlington, Pennsylvania, who were victims of a train derailment and chemical spill in 2023 are now facing an unexpected tax burden. Norfolk Southern railroad, the company responsible for the incident, has sent 1099-MISC tax forms to individuals who received financial assistance payments from them. The forms list these payments as taxable income, leaving residents frustrated and concerned about their future.
The train derailment occurred in neighboring East Palestine, Ohio, when a Norfolk Southern train carrying toxic vinyl chloride derailed, spilling 1.1 million pounds of the chemical. To make matters worse, officials conducted a controlled release and burn of the overturned rail cars, resulting in a fireball and a large plume of black smoke filled with chemicals. Locals claim that the smoke contaminated their land and water, and they continue to experience the effects of the incident.
In response to the disaster, Norfolk Southern provided financial assistance to over 4,500 families, totaling $21 million. This assistance included payments for temporary housing, lost wages, property damage, and an “inconvenience payment” of approximately $1,000 per person in affected households. However, the IRS requires the company to send tax forms to individuals who received more than $600 in assistance payments, resulting in unexpected tax obligations for the victims.
The affected residents are frustrated by the tax burden, as they believe the derailment has caused health issues, decreased property values, and uncertainty about their future. They argue that the payments they received were meant to compensate for the hardship caused by the incident and should not be taxed as income.
Efforts are underway to address this issue legislatively. Representative Bill Johnson introduced the East Palestine tax relief act, which aims to exempt federal taxes on payments made to individuals affected by the Norfolk Southern derailment. The bill is part of a larger tax relief act that has already passed in the House and awaits attention in the Senate. However, until the legislation is passed, residents are left in limbo regarding their tax obligations.
To help individuals understand the implications of the tax forms, Norfolk Southern hired a firm of certified public accountants to hold meetings and provide information. At one such meeting, attendees were advised to consider getting an extension on their taxes and wait for the outcome of the pending legislation. The company had initially hoped that the bill would pass, allowing them to avoid sending out the tax forms altogether.
Residents expressed their frustration during the meeting, with some suggesting that they ignore the tax forms on their filings. However, they were warned that the IRS uses software to compare tax forms and filings, potentially leading to audits if discrepancies are found.
The health concerns resulting from the derailment are also a significant issue for residents. Many claim to have experienced new health problems, such as persistent coughing and drainage, since the incident. Some have reported rashes and other skin issues, while others have been diagnosed with rare forms of cancer. The effects on the environment are also evident, with contaminated soil and water.
Residents are calling for action and support from both local and federal authorities. They feel that their voices are being ignored and that the government has failed to adequately respond to their needs. Some residents have even taken matters into their own hands, with one resident running for Congress in an effort to bring attention to the derailment and its aftermath.
In conclusion, the victims of the East Palestine train derailment are facing an unexpected tax burden due to financial assistance payments received from Norfolk Southern being listed as taxable income. The incident has caused health issues and environmental damage, leaving residents frustrated and uncertain about their future. Efforts are underway to provide tax relief through legislation, but until then, residents are left grappling with the financial implications of the disaster.
