Treasury Asked For Guidance On Unemployment Tax Treatment

Various types of unemployment aid authorized in 2020 to help people recover from the economic fallout caused by the novel coronavirus pandemic are most likely not taxable, a Georgetown University Law Center professor told Treasury in a letter released Tuesday.

The U.S. Department of the Treasury should provide guidance clarifying the tax treatment of the several unemployment aid programs authorized last year to combat the pandemic, Brian Galle of the Georgetown University Law Center said in the letter. A lot of this aid is likely not taxable under Internal Revenue Code Section 139(b)(4) , which excludes disaster assistance from income, the letter said.

The aid includes the Pandemic Unemployment Assistance program, which is for gig workers and other individuals who aren't eligible for traditional unemployment, and from the Federal Pandemic Unemployment Compensation program, which added $600 a week in unemployment aid, the letter said. It was also signed by Elizabeth Pancotti from Employ America and Seth Hanlon from the Center for American Progress.

--Editing by Vincent Sherry. 

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