On December 2, 2022, the Internal Revenue Service issued an announcement providing an update on the taxability of grants. The Announcement 2022-26 can be found at the following website: https://www.irs.gov/pub/irs-drop/a-22-26.pdf. Taxpayers should be informed that pursuant to the Announcement, IRS has determined that payments made by Suffolk County under the Septic Improvement Program are not to be included in the grant awardee’s gross income.  

Grant Awardees who may have already reported the grant payments as gross income on their 2019, 2020 or 2021 Federal income tax return may file an amended return with Form 1040 X for the year(s) in which they reported the income, and decrease their adjusted gross income by the appropriate amount, or consult your tax advisor. The Explanation of Changes on Form 1040-X should refer to “Announcement 2022-26.” Form 1040 X can be found at the following website: https://www.irs.gov/forms-pubs/about-form-1040x.  

The IRS’s announcement comes after the Natural Resources Conservation Service of the U.S. Department of Agriculture provided public notice on November 16, 2022 that in response to a request filed by the Suffolk County Commissioner of Health, the Secretary of Agriculture issued a determination that payments under the SIP Program are primarily for the purpose of conserving soil and water resources and protecting or restoring the environment, therefore meeting the requirements of § 126(b)(1)(A) of the Internal Revenue Code to be excluded. See Determination of the Primary Purpose of the New York Suffolk County Septic Improvement Program (SIP), 87 FR 68669 (Nov. 16, 2022).  

For further information about the Septic Improvement Program, please visit the website suffolkcountyny.gov/SIP.html or contact the Suffolk County Department of Health Services, Office of Ecology, at SepticDemo@SuffolkCountyNY.gov or (631) 852-5811.