Confusion over how to tax some Road Home grant recipients

(AP) – There is confusion among accountants and even Internal Revenue Service officials about how to tax two large groups of people who received grants from the Road Home program, which provides buyout or repair money for victims of the 2005 hurricanes.

There are about 5,500 taxpayers who sold their homes to the Road Home in 2007 and about 38,000 Road Home recipients who collected additional compensation grants for low- to moderate-income families during the year. An unknown number of grant recipients from the two groups also claimed structural casualty losses on prior tax returns.

Aaron Steele, the IRS’ senior liaison between Louisiana and Mississippi tax professionals and IRS tax code lawyers, told about 40 local tax preparers Thursday at a Kenner meeting to wait at least another two weeks before they handle the tax returns of Road Home recipients.

But Steele’s advice wasn’t accompanied by any offer of an extension in the filing deadline.

Local accountants say the lack of a clear directive is holding up returns and forcing consumers, some of whom will likely owe thousands of dollars in federal income taxes, to wait until the final weeks of the filing season before learning exactly how much they will have to pay.