A bipartisan group of seven U.S. senators wrote to Treasury Secretary Jack Lew last month to request a moratorium on imposing federal taxes on water conservation and storm water management rebates offered to water utility customers.
Signed by Sens. Dianne Feinstein (D-Calif.), Barbara Boxer (D-Calif.), Michael Bennet (D-Colo.), Cory Gardner (R-Colo.), Patty Murray (D-Wash.), Maria Cantwell (D-Wash.) and Dean Heller (R-Nev.), the May 26 letter said a moratorium would “provide relief to residents participating in water-saving measures, especially those in states affected by drought conditions.” The letter requested the moratorium apply to both the 2015 and 2016 tax years.
The letter was prompted in part by an IRS decision last year to classify water efficiency rebates offered by utilities to customers valued at more than $600 annually as taxable income. The decision prompted criticism on Capitol Hill, where earlier this year legislation was introduced in the House of Representatives to exempt water conservation rebates from taxation.
Corresponding legislation has not been introduced in the Senate, but the letter indicates the proposal would attract some support in the upper chamber. The senators wrote that the tax policy “undermines water conservation efforts and may exacerbate water shortages.
“At a time when the nation’s water resources face significant threats from drought, water supply variability, and extreme weather events,” the letter continued, “the federal government should do all it can to encourage residents to conserve water and to reduce the impact of runoff on water quality.”