WASHINGTON - U.S. Senators Amy Klobuchar (D-MN) and Deb Fischer (R-NE) released the statements below after the Internal Revenue Service (IRS) issued guidance that property owners will not owe taxes for lead service line replacement projects, including those funded by the Infrastructure Investment and Jobs Act. The clarification was made after Klobuchar and Fischer led a letter calling on the IRS to clarify the tax status of the grants so property owners could move forward with their replacement projects.

“Our country has an estimated 9.2 million service lines leaching lead into drinking water, which is putting Americans’ health at risk,” said Klobuchar. “Following Senator Fischer and my calls to the IRS, the agency is issuing new guidance so that state and local governments can begin to work with residents to remove these dangerous lead service lines across the country.”

“I’m pleased that the IRS has listened to our concerns and acted swiftly. Now, state and local governments across the country can start the critical work of removing dangerous lead service lines,”
said Fischer. 

Earlier this month, Klobuchar and Fischer led a bipartisan letter to IRS Commissioner Werfel urging the agency to make clear that property owners will not owe taxes on the cost of having their lead service lines replaced through the Infrastructure Investment and Jobs Act and other state and local programs. Many lead pipe replacements have been on hold due to concerns that the IRS could treat lead pipe replacement grants as income, potentially creating significant tax liabilities for property owners.

The Infrastructure Investment and Jobs Act was signed into law in 2021 and delivered a 50 percent increase in the amount of available funding for grants and resources for improving the state’s roads, bridges, public transportation, and water infrastructure.