The IRS has announced the federal income tax treatment of certain lead service line replacement programs for residential property owners. It is required by the federal and many state governments that the privately owned portion of the lead service be replaced simultaneously with other relevant parts of the water system containing lead.

In certain cases, the public water system reimburses the residential property owners or pays the contractors on their behalf to replace the said lead service lines. The Treasury Department and the IRS have determined that the replacement of lead service lines under the programs described above does not result in gross income to the residential property owners under Code Sec. 61. Accordingly, water systems and state governments are not required to file information returns or furnish payee statements with respect to the replacement of lead service lines under these programs.

Announcement 2024-10