Four Southern congressmen have written to the IRS asking for casualty loss deductions for homeowners whose property has been damaged by installations of defective Chinese drywall.

Sens. Mark Warner, D-Va.; Jim Webb, D-Va.; and Bill Nelson, D-Fla., along with Rep. Glenn Nye, D-Va., wrote to Floyd Williams, national director of legislative affairs at the IRS, to point out the problems that their constituents have experienced with the drywall.

They noted that many homes with Chinese drywall have shown evidence of extreme corrosion of pipes, air conditioning coils and electrical appliances. “According to our constituents, the drywall also emits a putrid smell and gas,” they wrote. “They have told us that these problems arise soon after they move into homes constructed with this drywall.”

Both the Environmental Protection Agency and the Consumer Product Safety Commission are investigating the matter, but the lawmakers noted that many of the affected families have needed to move out of their homes, pay for alternative accommodations and pay for the mortgage on their new, but damaged, homes.

“Toxic drywall has forced these families from their homes just like any fire or hurricane, and I believe they should qualify for this tax deduction,” said Nye. “A tax deduction isn’t going to solve this problem, but it is a step that can help relieve the burden on these families while we work to get them back in their homes.”

To provide some relief to them, the lawmakers asked the IRS to provide “clarity” on whether Section 165(h) of the Tax Code, which covers casualty loss deductions, could apply to them.

A casualty loss deduction is meant to cover losses from the complete or partial destruction of property resulting from a sudden, unexpected and unusual identifiable event. The lawmakers believe the Chinese drywall losses fit the three criteria.

“We are hearing from a number of homeowners in the Tidewater region who are experiencing adverse effects of this drywall in their homes,” said Webb in a statement. “A tax deduction from the IRS for resulting property damage and losses appears to be an appropriate step in these cases.”

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access