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USDA rules Long Island residents in septic improvement programs should be tax-exempt

Senate Majority Leader Chuck Schumer, D-N.Y.
Carolyn Kaster

U.S. Senate Majority Leader Chuck Schumer (D-NY) announced on Tuesday that the United States Department of Agriculture (USDA) has agreed to that residents participating in the Suffolk Septic Improvement Program should be tax-exempt.

Since 2017, Suffolk County has provided Long Island households at least $11,000 each to replace outdated and environmentally damaging residential cesspools and septic systems with upgraded models. However, Schumer argues households have been double taxed for accepting these grants to improve their septic systems.

Cindy Krezel, a member of the Long Island Sound Funders Collaborative, had a new septic system installed in 2019 after receiving a $20,000 grant. In 2020, the Internal Revenue Service considered the grant as taxable income, despite the money not going to homeowners directly.

“And then in the spring of 2020, I was surprised with approximately $6,000 more in taxes than I was expecting and the only thing that saved me, oddly, was the pandemic because we didn’t have to pay our taxes until July,” Krezel said.

Multiple applicants have told Schumer that they have also been taxed for their grants, which he said is discouraging other households from participating in the program. The program aims to help the environment by reducing nitrogen pollution in local bays and other bodies of water.

“We’re going to push the United States Department of Agriculture to agree with us: Don’t double-tax our people for doing good for the environment, '' Schumer said. “Well, I’m here to announce the USDA has agreed. They have said that this should not be taxed.”

Now that the USDA has agreed to exempt the taxes, Schumer will pressure the IRS for tax exemption status for the program's applicants.

Over 3,500 people have applied for the program, and there have been close to 1,500 improved septic installations.

Eric Warner is a news fellow at WSHU.