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Hundreds Of Suffolk Homeowners Are STILL Confused & Only IRS Has Final Answer; Schumer Rallies To Clear This Whole Thing Up & Get Answers

Standing With Suffolk Homeowners, Senator Says Grant Program Is A Public Good With A Regional Benefit – Reducing The Massive & Noxious Nitrogen Pollution in LI Waterways – & That IRS Should Not Consider Voluntary Septic Upgrades As Personal Income; Right Now, Contractors Are Paying The Bill, So IRS is Not Out Any Money

Schumer To IRS: Don’t Turn A Win-Win Program Into A Lose-Lose – Suffolk Homeowners, Already Taxed By Nitrogen, Shouldn’t Get A Bill For Trying To Solve The Problem

Standing with Suffolk officials, contractors and homeowners taxed by confusion –and now actual bills—from the Internal Revenue Service (IRS), U.S. Senator Charles Schumer rallied, today, for a Suffolk County grant program laser-focused on reducing the massive nitrogen pollution in Long Island waters. The Suffolk Septic Improvement Program (SIP) which replaces outdated and environmentally-damaging residential septic systems with nitrogen-eliminating ones has attracted rightful interest of homeowners, but now many of those same homeowners are dropping out of the program because of confusion and worry tied directly to their pockets. Schumer, today, said this County program cannot afford to cease and that the IRS must clear things up before participation and funding wane.  

“Suffolk homeowners, already taxed by nitrogen, shouldn’t also get a bill from the IRS for trying to address it,” said U.S. Senator Charles Schumer. “Because of outdated systems, nitrogen across the Island seeps into our waters and contributes to environmental damage and the County is doing the right thing by mitigating it with this septic grant program, but now facing so much confusion and under the threat of big bills from the IRS, this progress could cease, and I am here to say that cannot happen. I am here to make it clear for Uncle Sam: you aren’t losing out on any money when a Suffolk homeowner participates in this grant program, because the local contractors are paying the tax. And I am here to add that we cannot turn a win-win into a lose-lose.”    

Schumer detailed a real-time update on the program, urged the IRS to NOT consider voluntary septic upgrades as personal income, especially because LI contractors are already paying taxes on their own end, and demanded that the agency issue their verdict so Suffolk County can get back to doing good environmental work and not lose out on $10 million in funding that the program has secured.    


  • 1731 Total Applicants
  • 6 Withdrawn Applications with more considering since IRS issue emerged
  • 396 Issued Grants
  • 102 Installations to date
  • 121 Pending Installations in potential jeopardy

Schumer explained that the Suffolk Septic Improvement Grant Program (SIP) provides contractors with state and county grants to install nitrogen-reducing septic systems for participating homeowners in an effort to reduce nitrogen pollution in the region. The grants range in value from $10,000 to $20,000 and are awarded to companies installing and designing the septic systems.

According to Newsday, 60 Suffolk County homeowners who participated in this grant program received IRS 1099 tax forms that could result in thousands of dollars in federal taxes if the grant is counted as the homeowners’ personal income. In addition to homeowners receiving these tax-liability forms, the contractors, who install the septic systems, already declared the grants as income and paid taxes on them. SIP was specifically designed to avoid creating a tax liability for participating homeowners by paying the contractors directly, thus, homeowners should not be taxed for septic system grants that they never laid their hands on, Schumer argued.

“Suffolk County’s historic Septic Improvement Program was carefully and purposely designed so that installation companies, and not homeowners, receive the grant funding and report those disbursements to the IRS as income,” said County Executive Bellone. “The program was designed to protect homeowners who decide to do their part to improve water quality from any potential tax liability. Since the installation companies are all reporting the grant income they receive as income and are paying taxes on that income, the County is optimistic that the IRS will confirm that grants should not be considered taxable income to homeowners.”

“I want to thank Senator Schumer for his support of the County’s Septic Improvement Program and his efforts to have the IRS verify that the grants are not taxable,” said Suffolk County Legislator Robert Calarco. “By providing homeowners, who otherwise cannot afford to undertake these upgrades, with grant assistance, we will see a dramatic decrease in nitrogen and other pollutants being discharged from individual septic systems and a corresponding increase in water quality. Taxing those grants as personal income will discourage participation and effectively undermine the program. I am sure with the strong leadership of Senator Schumer, we will get the proper ruling from the IRS and restore confidence in this important program."

“The crisis we presently are faced with is an alarming trend in the deteriorating quality of our water. Our drinking water, our rivers, and our bays. An environment loss as well as an economic impact affecting a reduction of over 6000 jobs over the past quarter century in shellfish industry just in the Great South Bay. We in Suffolk County are proud to have undertaken a careful response to address this crisis and that the issuance of grants for the Septic Improvement Program has been taken with great consideration to insure that responsible homeowners not be taxed. We appreciate Senator Schumer’s support to Suffolk County taxpayers and his demonstration of his commitment to our precious environment and that our residents not be unfairly burdened,” said Suffolk County Legislator Bridget Fleming, of the 2nd District.

While homeowners were made aware of annual operation, maintenance, increased annual electrical, repair, replacement and pumping costs, they were kept in the dark about any tax liability or consequences. Homeowners fear that counting these grants as taxable income will push them into a higher tax bracket and result in higher federal taxes, Schumer explained.

“Since my home needed a new cesspool, this seemed a way to be environmentally responsible. I live in an area that is ecologically sensitive, being only 800' from Reeves Bay and surrounded by tidal marshes and wetlands. The price was too much to take on, but when the Suffolk County Grant came about, followed by the Town of Southampton Rebate, I felt that for my home and situation, this became a real solution. Unfortunately, not only am I penalized for doing a positive thing, but my personal taxes are being affected by 3x more than I was expecting to pay, based on my income. Between the Grant and the Rebate, my income has increased $25,000 for monies that I did not earn. Because it put me over the threshold, my total social security is now taxable and my tax rate has more than doubled. Certainly not what I expected when I started this project, and definitely not affordable,” said Dorothy Minnick of Riverhead, a SIP participant.

Schumer reiterated his concerns that Suffolk County homeowners are halting plans to upgrade their septic systems and other homeowners have withdrawn their applications altogether due to this newfound tax liability. As detailed above, 1,731 homeowners have applied to the Suffolk County Septic Improvement Grant Program and 6 of those applicants have withdrawn. Moreover, 396 grants have been issued to replace residential cesspools and old septic tanks; 102 new nitrogen-reducing septic systems have been installed, and there are 121 pending installations.

“Recent confusion and concern caused by the issuance of 1099’s to homeowners who participated in a program to upgrade their polluting septic systems will only lead to uncertainty and skepticism on the part of the public that we need fully engaged in the battle to improve water quality on Long Island,” said Kevin McDonald, Policy Director for the Nature Conservancy. “Thank you to Senator Schumer and County Executive Bellone who have called for this error to be corrected and who are committed to providing clean water for future generations.” 

Schumer explained that this grant program, SIP, is critically important for environmental protection and was created to reduce high levels of nitrogen emitted from the hundreds of thousands of unsewered homes in the county. High levels of nitrogen cause harmful algae blooms, hurt saltwater fish, and can result in reduced oxygen levels in the water and public water well contamination.