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Reporting Requirements for Municipality Payments to Residents
February 26, 2025
Q. I work for a municipality and the city is issuing payment to some residents for sewer backup. Is this payment reportable if it is for reimbursement for repairs and/or a "settlement " for damages? Needing to know if I need to request a W-9 from them.
A.
(Answered by IOFM's third-party tax advisor)
There is not a specific answer to this in the guidance, but this would not seem to fall under the heading of a grant. Grants would be taxable income to the recipient unless an exclusion such as the…
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