WASHINGTON, D.C. – U.S. Senators Thad Cochran and Roger Wicker (R-Miss.) today suggested that Mississippians consult a new federal procedure that provides favorable tax relief for property losses associated with corrosive drywall.

The Internal Revenue Service (IRS) has issued guidance for affected homeowners who have experienced the harmful effects of corrosive drywall, much of it imported from China following Hurricane Katrina, Hurricane Rita and subsequent storms.

IRS Revenue Procedure 2010-36 outlines how damage repair costs related to corrosive drywall, including metal corrosion and other damage, can be treated as a casualty loss.  The guidelines also provide a “safe harbor” formula for determining the amount of the loss.

“The IRS, with this rule, is attempting to help homeowners more easily recover costs associated with repairing damage caused by contaminated drywall.  Mississippians whose homes have been harmed should study the new guidelines to determine whether they can benefit from this favorable tax clause,” Cochran said.

“Many Mississippi families who rebuilt along the Gulf Coast later found substantial problems caused by corrosive drywall,” said Wicker.  “I am glad the IRS is working to help those affected by this costly problem.”

Over the past year, Cochran and Wicker have asked the Federal Trade Commission and U.S. Consumer Products Safety Commission (CPSC) to adequately address the problems posed by corrosive drywall, including proposing a broad public information campaign to alert homeowners to the potential health and safety hazards arising from drywall contamination.

In general, the new IRS rules will allow “casualty loss” claims to be filed by homeowners who have paid to repair damage to their personal residences or household appliances caused by corrosive drywall.  The amount of the loss that may be claimed will depend on whether the taxpayer has been reimbursed or has a claim to be reimbursed through property insurance, litigation or other means.

In August, the CPSC reported logging more than 3,500 incidents related to corrosive drywall from 38 states, with 6 percent of those claims originating in Mississippi.

Mississippians with general concerns about drywall in their homes can visit the Drywall Information Center website, which provides information on the problem and how to report cases to the proper authorities.  The site is hosted by the CPSC, Environmental Protection Agency, Centers for Disease Control and U.S. Department of Housing and Urban Development.
         
Links:
• IRS Drywall Notice:  http://www.irs.gov/newsroom/article/0,,id=228402,00.html
• IRS Revenue Procedure 2010-36:  http://www.irs.gov/pub/irs-drop/rp-2010-36.pdf
• CPSC August Report:  http://www.cpsc.gov/info/drywall/aug2010status.pdf
• Drywall Information Center:  http://www.cpsc.gov/info/drywall/index.html

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