Right now, those payments are considered income by the federal government. Fire survivors say it's creating an additional financial burden for them.
Brad Sherwood and his family survived the 2017 Tubbs Fire.
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"We lost pretty much everything," Sherwood said. "Like many others we were underinsured."
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Sherwood said his family used every penny of insurance to rebuild. They also took out personal loans and used private funding. He received PG&E Fire Victim Trust settlement payments but says that money has been cut significantly due to federal taxes.
"It means that you're not going to be able to financially make yourself whole after the worst night of your life," Sherwood said.
As of now, the IRS considers the payments income.
A bipartisan bill reintroduced this year would change that -- but fire victims say not soon enough.
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'Stronger and better' | Survivors remember Tubbs Fire 5 years later
"A slight change in the IRS code can make a heck of a difference in communities across this nation," said Sherwood.
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Congressman Mike Thompson co-sponsored the bill. He says getting it through Congress before April 15 is impossible.
"I understand how important this is," Thompson said. "In reality, there's probably a real strong possibility that this is going to have to be married to some other type of relief bill."
This week, a delegation with After the Fire USA -- including fire survivors like Brad Sherwood -- flew to Washington, D.C. to lobby for the passage of the bill.
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Jennifer Gray Thompson is After the Fire USA's CEO and founder.
"We don't feel that fire victims should have to suffer for another year. We feel like this has to get done now and we need a sense of urgency so that they are not burdened by this enormous, unfair tax liability," said Gray Thompson.
Beyond the tax liability, treating PG&E Fire Victim Trust settlement payments as income has other implications, including on premiums for Covered California health insurance and on any other services or benefits based on income.
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"This is exactly what we're trying to avoid. We do not want these payments that are owed that are justly owed to these fire victims to be a further penalization of the recovery process for them," said Belia Ramos, Napa County 5th District supervisor.
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"I don't think it's fair, and I'm going to do everything I can to help resolve it," Thompson said.
During their days on the hill, the delegates met with lawmakers to put a face and name on their stories and efforts to rebuild.
"We want to see every penny, every dollar from the Trust go to the fire survivors, go into our families, get into our communities," Sherwood said. "This bill could make or break someone's rebuild capabilities."
A Spokesperson for Covered California tells ABC7 News in an emailed statement:
"Covered California is committed to improving affordability and helping people access quality health insurance coverage. In this situation, Covered California is bound by the regulations established by the federal Affordable Care Act, which considers household income when determining whether someone qualifies for financial help to lower the cost of their health insurance premiums. Currently, the U.S. Treasury Dept. considers reparation payments from the PG&E Fire Victims Trust to be taxable income.
We understand there is proposed legislation that would remove this tax burden and could make these consumers eligible for lower health insurance premiums through Covered California. We are watching the issue closely and stand ready to help these families if the legislation passes."
If you're a wildfire survivor who would like to share your story, you can contact Melanie Woodrow at melanie.woodrow@abc.com or on Facebook and Twitter @MelanieWoodrow