December 13, 2021 1:24 am

Disaster Relief Payments Are Tax Free

Victims of disasters may receive goods and financial help from organizations, such as the Red Cross. IRS Commissioner Rettig confirmed that such payments are not taxable to recipients. Gifts from organizations are specifically excludable from gross income (Code Sec. 102). The same tax-free treatment applies to gifts received from individuals; they are not included in gross income. Thus, for example, goods and other payments received by victims of the Surfside Condominium collapse are not taxable.

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Tax Glossary

Revenue ruling

A revenue ruling is the Commissioner’s “official interpretation of the interpretation of the law” and generally is binding on revenue agents and other IRS officials. Taxpayers generally may rely on published revenue rulings in determining the tax treatment of their own transactions that arise out of similar facts and circumstances.

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