The IRS says it will refund taxes levied on Ohio residents who received financial assistance after the Norfolk Southern derailment

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Most people who received money from Norfolk Southern in the wake of last year fiery train derailment After all, eastern Ohio won’t have to pay taxes on millions of dollars in relief payments.

The Domestic Tax Authorities said Wednesday that most payments that people living near East Palestine, Ohio, received to help them afford temporary housing or replace their belongings are not taxable due to the February 3, 2023 derailment that forced thousands of people evacuate their homes qualified as ‘an event of a catastrophic nature’.

The railroad estimates it paid more than $21 million to residents after the derailment as part of the more than $107 million in assistance it provided to communities affected by the catastrophic train crash.

The fact that residents were told they had to pay taxes on the railway money was a sore point for people who still find it difficult to repair the derailment.

“I don’t know why they didn’t do that from the beginning,” said East Palestine resident Misti Allison. “The IRS ruling is a positive step in the right direction, but in the grand scheme of things it is minor. I truly hope that President Biden makes good on his promise that what Norfolk Southern “cannot make whole” that “the government will make whole.”

Residents are unsure whether they are part of one $600 Million Class Action Settlement Norfolk Southern agreed or backed out of that deal so they could file their own individual lawsuits. They can hear the outcome of the study later this month National Transportation Safety Board investigation in the derailment during a hearing in East Palestine. The safety council previously said there had been a crash probably caused due to an overheating of one of the train cars that was not detected quickly enough by track sensors to prevent the derailment.

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U.S. Senator Sherrod Brown of Ohio said it should not have taken so long for the IRS to realize the derailment was a disaster.

“This is a long overdue step: the people of eastern Palestine should never have had to pay taxes on the assistance they needed in the aftermath of the train derailment,” Brown said.

Norfolk Southern also praised the IRS decision.

“We are proud of the investments we have made in East Palestine and commend the IRS for taking action to relieve residents of an additional federal tax burden,” the railroad said in a statement.

The IRS said some payments would be taxable if they related to lost revenue or payments to businesses or payments the railroad made to access land during the ongoing cleanup effort.

Residents who already filed their taxes before the normal April 15 deadline will have to amend their returns and request a refund for the taxes they paid on payments from the railroad.

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