Oklahoma congressman Ernest Istook introduces bill to stop grant taxation

Thursday, January 27th 2005, 6:23 am
By: News On 6

OKLAHOMA CITY (AP) -- U.S. Rep. Ernest Istook joined other House members Wednesday in introducing a bill to prevent the taxation of federal grants designed to help victims of tornadoes, hurricanes and other natural disasters.

"No one ever intended that these grants be taxed," Istook,R-Okla., said. "And we are going to make sure that they won't be. It's merely common sense that if the government gives someone a grant to help them build safe rooms or flood protections, they shouldn't have to pay a portion back in taxes."

The Internal Revenue Service recently ruled that the grants are considered taxable income by the recipients. Tax Commission spokeswoman Paula Ross said last week that anything considered taxable by the IRS is taxable at the state level.

The bill currently excludes Federal Emergency Management Agency Hazard Mitigation Grants from gross taxable income. The IRS first determined these FEMA grants to be taxable last summer.

"We will continue to work out a few tweaks, but this is an important first step in making sure Oklahomans are protected from unfair taxation of these grants," said Istook.