The announcement comes after pressure from Hawaii’s congressional delegation.

WASHINGTON — The IRS announced Wednesday that the families and individuals who were forced to relocate for months to local hotels during the U.S. Navy’s Red Hill fuel crisis will not have to pay taxes on the reimbursements they received from the federal government for those expenses.

Gate located near the Red Hill Fuel Tanks.
A gate located near the U.S. Navy’s Red Hill bulk fuel storage facility. (Cory Lum/Civil Beat/2022)

In February, Hawaii News Now first reported that many residents whose drinking water was poisoned after a 2021 fuel leak at the Red Hill fuel storage facility were being asked to pay thousands of dollars in taxes on the relief aid that they had received because it was being counted as extra income.

The state’s federal delegation pushed back against the IRS, and this week received confirmation that the agency would not require those affected to pay taxes on the money they received.

“These taxes were unfair and unexpected, and I’m glad we were able to fix this,” U.S. Sen. Brian Schatz said in a statement Wednesday.

“I thank the IRS and (Department of Defense) for working with us to quickly resolve this. It’s now up to the IRS to make sure that every taxpayer impacted by this mistake is aware of this fix and any taxes on these reimbursements already paid for are returned.”

According to U.S. Rep. Ed Case, nearly 1,700 families were relocated during as a result of the fuel leak.

In a written statement he said that the IRS’s decision to tax those families for the aid they received was “straight-out wrong.”

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