SENATOR MURKOWSKI WINS PASSAGE OF
EXXON VALDEZ OIL SPILL TAX LEGISLATION
WASHINGTON, D.C. – Senator Murkowski today won Senate approval of tax legislation to give individual plaintiffs in the Exxon Valdez oil spill litigation ability to increase retirement contributions and to provide tax relief through income averaging. The legislation was included as an amendment to the Senate Farm Bill, which passed this afternoon.
The legislation provides tax relief to all of the individual plaintiffs in the oil spill settlement, 80 percent of whom are commercial fishermen. It was drafted to cover any possible settlement while the case is in litigation and any amounts received under the judgment if it is upheld. The current level of court-approved punitive damages is $2.5 billion, plus interest.
“Today is a great day for the approximately 30,000 plaintiffs in the Exxon Valdez oil spill case,” said Senator Murkowski. “This legislation will provide tax relief so that the fishermen and Alaskans who will receive punitive damages will be able to keep more of the money they rightfully deserve. It was critical to get this legislation passed now in anticipation of the Supreme Court’s final decision in the spring, and I am thankful for my colleagues support in the Senate.”
The bill includes the following provisions:
• Allows individual plaintiffs to income average any payouts from this case over a three year period of time. Currently, fishermen can average their income over three years due to the volatile nature of the industry. Despite the fact that any income from this case is essentially lost income for fishermen and others whose livelihoods were negatively impacted by the spill, punitive damage or settlement-related income from litigation can not be averaged over three years under current law.
• Permits individual plaintiffs to contribute up to $100,000 to a traditional IRA, Roth IRA, SEP (Simplified Employee Pension) IRA and other retirement plans, such as 401(k) plans, 403(b) plans and 457 plans.
• Exempts plaintiffs from having to pay self-employment taxes or payroll taxes on any payouts from this case.