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Forbes
an hour ago
- Business
- Forbes
Federal Disaster Tax Breaks Are Big, But Which Declarations Count?
TOPSHOT - A home burns during the Palisades Fire in Pacific Palisades, California, on January 8, ... More 2025. At least five people have been killed in wildfires rampaging around Los Angeles, officials said on January 8, with firefighters overwhelmed by the speed and ferocity of multiple blazes. (Photo by AGUSTIN PAULLIER / AFP) (Photo by AGUSTIN PAULLIER/AFP via Getty Images) Disaster victims get big tax benefits from federal disaster declarations. In fact, it can make your wildfire settlement tax free. As such, you might logically assume that it is always 100% whether your particular disaster gets the helpful federal nod from FEMA. But in the case of wildfires, is it always so clear? The tax law defines a Federally declared disaster as 'any disaster subsequently determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act,' commonly known as the Stafford Act. It has three principal types of disaster relief declarations for wildfires: Only two wildfires appear to have obtained their FEMA disaster declarations as Declared Emergencies since 2019, the 2020 Oregon Wildfires (designated EM-3542-OR) and the 2021 California Caldor Fire (designated EM-3571-CA). Declared Emergencies are less common for wildfires, perhaps because there is a separate avenue for wildfires, Fire Management Assistance Declarations under Section 420 of the Stafford Act. Some wildfires are given Major Disaster Declarations, including the recent 2025 LA fires. Historically, so were the 2015 California Butte Fires (DR-4240-CA), the 2017 North Bay Fires (DR-4344-CA), and 2018 Woolsey Fire and Camp Fire (DR-4407-CA). Major Disaster Declarations qualify victims for the widest scope of direct federal assistance through FEMA via Any wildfire with a Major Disaster Declaration clearly qualifies as a Federally declared disaster for tax purposes. Section 1.165-11(b)(1) of the IRS Regulations says a Federally declared disaster 'includes both a major disaster declared under Section 401 of the Stafford Act and an emergency declared under section 501 of the Stafford Act.' These two types of declarations are specifically included within the definition of a Federally declared disaster for tax purposes. How about the third category? Section 1.165-11(b)(1) is silent about Fire Management Assistance Declarations, the third major type of declaration for wildfires. But the statutory language suggests that a Federally declared disaster means any declaration under the Stafford Act. Plainly, Section 420's Fire Management Assistance Declarations are federal relief so seem to be covered. Fire Management Assistance Declarations usually do not provide or authorize the same scope of direct federal assistance to wildfire victims as Major Disaster Declarations. However, Section 165(i)(5) of the tax code only requires that the disaster be determined by the President to 'warrant assistance by the Federal Government' under the Stafford Act. Providing money, equipment, supplies, and FEMA personnel to a State or local government to assist in wildfire containment and recovery efforts appears to fall within the definition of 'assistance by the Federal Government' under the Stafford Act. Many recent major wildfires received disaster declarations under Section 420's Fire Management Assistance provisions. The LA fires in 2025, including in Pacific Palisades were not originally Major Disaster Declarations, but Federal Management Assistance Declarations. However, on the day after they were granted relief under The Fire Management Assistance provisions of Section 420, they were then also the subject of a Major Disaster Declaration under Section 401. This supplemental disaster declaration is important for victims for non-tax reasons, but the Fire Management Assistance Declaration was arguably already sufficient to qualify the fire as a Federally declared disaster for tax purposes. Many wildfires remain disasters declared only under Section 420's Fire Management Assistance relief provisions without a Major Disaster Declaration, and this is arguably enough to unlock the tax benefits. Fire Management Assistance relief under Section 420 of the Stafford Act appears to often be granted for wildfires for the same purpose that a Declared Emergency declaration would be used outside of the wildfire context. There have only been two wildfires nationwide that have been identified as Declared Emergencies since 2019, compared to 305 fires that received a Fire Management Assistance Declaration. There are differences between the two types of declarations. However, both are usually granted to help state and local governments deal with emerging disasters that need to be contained, or to help with rescuing and immediate medical treatment of victims. The regulations under Section 165 of the tax code suggest that Declared Emergencies under Section 501 of the Stafford Act are considered Federally declared disasters for tax purposes, regardless of whether they later result in a Major Disaster Declaration. It would be unusual if similar federal assistance usually provided in the wildfire context, and also under the Stafford Act, would not be treated similarly as a Declared Emergency for income tax purposes. Some devastating wildfires are not designated as disasters by FEMA under any provisions of the Stafford Act. For example, the Mountain View Fire of 2020 burned for nearly a month, consuming nearly 21,000 acres in California, destroying 80 buildings (damaging many more) and killing at least one person. This fire was not large enough for FEMA to consider it outside of the combined capability of the California state and local governments and relief organizations to address without federal involvement. Therefore, the Mountain View Fire was designated by California as a state disaster, but not a federal disaster by FEMA. A disaster declaration by a state is NOT sufficient to qualify a disaster as a Federally declared disaster for federal tax purposes. It is easy to get confused, but no state-declared disaster that is not a federally declared disaster has a disaster description and designation on the FEMA website. There is no FEMA disaster declaration page for the 2020 Mountain View Fire, under the EM, DR, or FM prefixes. For state-declared disasters that are not Federally declared disaster, the main federal recognition of the disaster is not by FEMA. The SBA way offer relief, but that is not sufficient to make a state-declared disaster a Federally declared disaster for income tax purposes.
Yahoo
7 days ago
- Climate
- Yahoo
Kehoe, White House offer differing status updates of federal disaster assistance for May 16 tornadoes
ST. LOUIS – Two weeks ago, Missouri Governor Mike Kehoe requested President Donald Trump issue a federal emergency declaration for the state of Missouri in response to the May 16 tornadoes and severe storms. Last week, Kehoe asked the president to approve a federal disaster declaration. Neither have been approved yet. 'No city is equipped to deal with a disaster the size of this tornado, period. And we need FEMA; we need FEMA's help,' St. Louis Mayor Cara Spencer said. But Spencer noted Monday that getting FEMA's help is a process. 'We are not the oldest, in fact, we are the newest application,' she said. 'We do have the support of our governor, and I am going to remain constructive and hopeful through this process, because I believe it's the best way for us to move forward in the best shot at getting the federal partnership that we need to be able to best serve our community.' FEMA representatives have been in St. Louis as part of joint preliminary damage assessments (PDAs). The teams are tasked with surveying and verifying damage to determine if individual and public assistance can be requested from FEMA. Close Thanks for signing up! Watch for us in your inbox. Subscribe Now 'For those that don't have insurance, if there's a major disaster declaration that is approved, then FEMA can come in and provide some additional assistance, along with a host of other voluntary organizations, state partners, other federal partners,' FEMA spokesperson Ryan Lowry-Lee said in a May 28 interview. FEMA PDAs are a key step in determining whether St. Louis will qualify for a major disaster declaration. FEMA tells me Gov. Kehoe submitted his request for federal assistance to the agency's regional office. They then sent their recommendations to FEMA headquarters. FEMA headquarters sent its recommendations to President Trump. Now, it's up to the president—and only the president—to issue the federal declaration. The governor's office tells FOX 2 News that Kehoe and his team continue to be in discussions with the White House as well as Missouri's federal delegation regarding this FEMA request. They do not have any further updates at this time. FOX 2 also contacted the White House for an update. A White House official responded with the following statement: The President responds to each request for Federal assistance under the Stafford Act with great care and consideration, ensuring American tax dollars are used appropriately and efficiently by the states to supplement—not substitute, their obligation to respond to and recover from disasters. While the President's decisions are communicated directly to the Governor of an affected State, the Trump administration remains committed to empowering and working with State and local governments to invest in their own resilience before disaster strikes, making response less urgent and recovery less prolonged. White House statement Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
20-05-2025
- Politics
- Yahoo
Opinion: The Wasatch earthquake is long overdue, and America isn't ready
Experts believe that the Wasatch Fault, one of the longest and most active normal faults in the world, is long overdue for a major earthquake, with a 57% chance of experiencing a magnitude 6.0 or greater earthquake within the next 50 years. This is common knowledge among Salt Lakers, who consider themselves blessed, if not lucky. But luck isn't a plan. And with our national disaster system melting down, they could be on their own when The Really Big One finally hits. Early in his second term, President Trump signed Executive Order 14239, seeking to offload responsibility for disaster response to state and local governments. A few days later, Homeland Security Secretary Kristi Noem said she planned to 'eliminate' the Federal Emergency Management Agency (FEMA). This isn't reform. It's abandonment. It's chaos by design. Here's how our disaster system is supposed to work: Local responders are the first in. The state backs them up. And when the scale of the crisis exceeds their capacity, the federal government steps in — like a big brother with deep pockets and national muscle. The Stafford Act authorizes this, and the National Incident Management System is the playbook. This system, when it works, brings order to the chaos of catastrophe. But it is being dismantled before our eyes. And no one has any idea what will take its place. The system hasn't always worked. After Hurricane Maria in 2017, chaos in the first Trump administration led to prolonged suffering in Puerto Rico. Then came the spectacular collapse of federal crisis management in April 2020 during COVID's early weeks. 'We were all told on a phone call — all 50 governors — that we were basically on our own,' said Washington Governor Jay Inslee. Hospitals overflowed. PPE vanished. States were left to compete against each other for lifesaving supplies. The administration's workaround seems to be to write the federal government out of the process altogether. That huge gamble is based on the idea that 'all disasters are local' — a concept that crumbles in the face of true catastrophe. Studies of major earthquake responses — from Mexico City in 1985 to Christchurch in 2010 to Türkiye in 1999 and 2023 — have found time and again that local and state governments were overwhelmed within hours. With several strands of the fault zone passing directly through the city, this matters deeply for Salt Lake City, one of the most seismically hazardous urban areas in the West. If the Really Big One hit today, would we be ready? Not even close. The United States has the resources, the people and the expertise. What we don't have is someone in charge to make things happen. We need FEMA — now more than ever — to manage the increasingly complex and severe disasters of a polycrisis age. A refocused and empowered FEMA would forge strong public-private partnerships, leading a response that is government-led but not government-centric. It would become the national disaster machine we so desperately need: fast, coordinated, relentless. But we are running out of time. One of these days, in the not-too-distant future, Salt Lakers will wake up in a parallel universe. The fault will finally give way, shredding the Wasatch Front and ripping a gash in the earth's crust from Ogden south through Salt Lake City and all the way to Provo. Dazed families will wander through ruined streets. Thousands will be trapped in the rubble. And no one will be coming to help. When that failure happens, it won't stem from a lack of personnel, equipment or technology. It will stem from a lack of competence. And that will be the catastrophe within the catastrophe.
The Hill
17-05-2025
- Politics
- The Hill
‘Get FEMA out of Homeland Security': Former FEMA director
Former Federal Emergency Management Agency (FEMA) Director Michael Brown, who led the agency during Hurricane Katrina, believes FEMA should be rid of unnecessary bureaucracy. Brown, who joined 'The Hill on NewsNation' to discuss a reporting from The Hill that an internal memo warned 'FEMA is not ready' for this hurricane season, says the agency should be independent from the Department of Homeland Security (DHS). President Trump said in January that he wanted the states to oversee disaster relief as opposed to the federal government. DHS Secretary Kristi Noem, a vocal supporter of the president, has vowed to dismantle the agency. The former director told host Blake Burman that FEMA being under DHS makes it 'a bureaucracy on top of a bureaucracy.' 'Make the FEMA administrator under the Stafford Act, like it has always been, directly reportable to the president of the United States,' Brown said. 'And then, make certain that we start strengthening state and local response … we have actually weakened state and local governments by throwing so much money at them, and then they use that money to offset budget shortfalls they have,' he added. When asked if there would be tension should hurricanes — such as the recent deadly Hurricane Milton and Hurricane Helene — damage the U.S. again, Brown replied, 'Absolutely.' But, he said, he did not have much hope of addressing or resolving the future of FEMA. 'It's Washington, D.C.,' Brown told NewsNation.
Yahoo
17-05-2025
- Politics
- Yahoo
‘Get FEMA out of Homeland Security': Former FEMA director
(NewsNation) — Michael Brown, who led FEMA during Hurricane Katrina, believes the agency should be rid of unnecessary bureaucracy and independent from the Department of Homeland Security. Brown joined 'The Hill on NewsNation' to discuss a report from The Hill that said an internal memo warned 'FEMA is not ready' for this hurricane season. President Trump said in January that he wanted the states to oversee disaster relief as opposed to FEMA. 'Get FEMA out of Homeland Security, that's just a bureaucracy on top of a bureaucracy,' Brown said. 'Make the FEMA administrator under the Stafford Act, like it has always been, directly reportable to the president of the United States.' Live: Officials give an update on the New Orleans manhunt 'And then, make certain that we start strengthening state and local response … we have actually weakened state and local governments by throwing so much money at them, and then they use that money to offset budget shortfalls they have,' he added. When asked if there would be tension should hurricanes damage the United States again, Brown replied, 'Absolutely,' before admitting that he did not have much hope of addressing or resolving the future of FEMA. 'It's Washington, D.C.,' he added. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
