IRS provides guidance to spill victims

MOBILE, Alabama (WALA) - Individuals and business impacted by the Gulf of Mexico oil spill will want to revisit the IRS.gov Web site to check out some new arrivals.

The IRS recently added new information to its Gulf Oil Spill Information Center , including updated Questions & Answers, guidance on income averaging for fishermen, information about the taxability of reimbursements for clean up and removal costs, and a special section dedicated to payments received under the Vessels of Opportunity Program. Much of this information is available in Spanish and a portion has also been translated into Vietnamese.

Notice 1412 is new and clarifies the reporting of payments received from the Gulf Coast Claim Fund (GCCF), British Petroleum (BP) and Vessels of Opportunity Program (VOP). Under current law, these payments are taxable if they are for lost business income, lost wages or lost profits.

These companies should send recipients of these payments a Form 1099 or a Form W-2 and will also provide a copy of these forms to the IRS. Notice 1412 provides specific instructions regarding how to identify this reportable income on Forms 1099 and W-2 and where to report this income on a federal income tax return.

Because individuals have unique financial circumstances, the IRS encourages taxpayers to review their tax situation or talk with their tax preparers about the implications of payments or compensation they've received from the oil spill. Individuals and businesses with questions or tax issues related to the oil spill -- such as those struggling with payment and collection issues -- can also contact a special toll-free phone line established for Gulf Oil Spill tax assistance -- 1-866-562-5227. This special phone line operates weekdays from 7 a.m. to 10 p.m. local time.