Private well users, reimbursed by NH for PFAS remediation, are being taxed on it

Widespread confusion persists on taxable rebates
Kitchen Faucet

Hundreds of private well users have been reimbursed by the state after spending their own dollars to remediate PFAS contamination. But when tax season rolled around this year, they were mailed 1099 forms, telling them the money they received is considered federal taxable income.

The tax forms caused widespread confusion. Laurene Allen, a co-founder of Merrimack Citizens for Clean Water who serves on the state PFAS Commission, said people were “definitely being blindsided,” because they weren’t informed during the process about the possibility of the rebates being taxable.

“The concept of receiving taxpayers’ dollars to pay for what we did not cause,” Allen said, “is simply wrong.”

Since New Hampshire launched its PFAS Rebate Program last July, 500 rebates have been issued to people with contaminated wells who either installed a treatment system or connected to public water, according to the Department of Environmental Services. When the 1099 forms were mailed to rebate recipients, many balked at the idea of reimbursed remediation funds as “income,” particularly because they’d initially paid out of their own pockets for contamination they didn’t cause.

A 1099 tax form is typically sent to individuals who received money from an entity that isn’t their employer. In this case, the state sent 1099-G forms to those who received PFAS rebates, categorizing them as “state grants” that need to be reported to the Internal Revenue Service, and possibly on a tax return.

State officials say they’re required to issue 1099 forms under federal law and that they’ve been clear in communicating that. But as rebate recipients seek further guidance, they say the state isn’t giving clear direction on what exactly to do with the 1099 “income.”

Michael Strand, a Bedford resident and citizen representative on the state PFAS Commission, called it “unacceptable” that individuals impacted by PFAS continue ending up with liability for contamination the state has attributed to a private company — “even if it’s only taxable liability (in this case).”

Saint-Gobain Performance Plastics reached an agreement with the state last year to permanently provide safe drinking water to more than 1,000 properties in five towns. Those utilizing the rebate program are not located in geographic areas agreed upon by the consent decree, and critics have argued the omission means the agreement doesn’t fully address the scope of PFAS contamination attributed, though not legally, to Saint-Gobain.

The PFAS Rebate Program is funded by settlement money as well as $5 million from the Drinking Water and Groundwater Trust Fund and $15 million in general funds appropriated by the Legislature.

The program provides one-time rebates for up to $5,000 for the installation of PFAS treatment or up to $10,000 for a service connection to a public water system. Treatment installations that took place after Sept. 30, 2019, are eligible for the program.

Recipients say state agencies have not been clear about the tax implications.

DES did not post public guidance on its website until after receiving several inquiries by the New Hampshire Bulletin that went unanswered starting March 9. The guidance that was posted on March 16 was from the Department of Administrative Services, telling people the state does not issue tax advice and that they should consult with their own tax advisers.

Asked further why DAS isn’t able to provide more clarity to residents, state comptroller Dana Call said the office issues 1099 forms for rebates every year, including solar grants and Covid-19 grant funding.

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