Understanding Tax Reporting for SCE’s Wildfire Recovery Compensation Program

Talk to a qualified tax adviser to understand your specific situation.

October 29, 2025

The Internal Revenue Service (IRS) has specific tax reporting requirements for settlement payments. You might have questions about how payments from the Wildfire Recovery Compensation Program are reported to the IRS and what it means for your taxes.

While this article will explain SCE’s legal reporting requirements and the circumstances specific to the program, it is not intended to be tax advice. You should always consult with your tax adviser to discuss your specific situation.

WHY AN IRS FORM 1099-MISC?
Some payment types covered under the program are considered “Reportable Payments.” Under federal law, SCE is required to include reportable payments made to claimants using IRS Form 1099-MISC.

  • This form is sent to both the claimant and the IRS.
  • If you're represented by an attorney, your attorney will also receive a copy, as required by IRS regulations.

Receiving a Form 1099-MISC does not automatically mean the payment is taxable. The actual taxability depends on your individual circumstances, which SCE cannot determine. In fact, some payments may be taxable, even if they aren’t reported on Form 1099-MISC.

REPORTABLE VS. NON-REPORTABLE PAYMENTS

SCE follows IRS rules to decide which payments must be reported. Here’s a breakdown.

Non-reportable Payments
SCE will exclude all “Non-reportable Payments” as allowed by law from the 1099-MISC reporting. These include economic and non-economic compensation for the following:

  • Real Property Loss or Damage: Compensation for residential owners and tenants for rebuilding, repairing or remediating damaged or destroyed homes. 
  • Personal Property Loss or Damage: Payments for lost or damaged personal property.
  • Physical Injury or Loss of Life: Payments for personal physical injury or loss of life.
  • Commercial Property Owners: Compensation for rebuilding or repairing commercial properties and tenant improvements.
  • Commercial Tenants: Payments for lost or damaged personal property.
Payments made in 2025 for non-economic losses to residents of eligible properties are non-reportable. This is due to special rules under the Federal Disaster Tax Relief Act of 2023, which expire at the end of 2025. In 2026, these same payments are considered reportable (excluding physical injury or loss of life, which continue to be non-reportable payments).

Reportable Payments
  • Lost Rental Income and Business Interruption: Except for payments made to individuals in 2025 (see Federal Disaster Tax Relief Act of 2023), all payments for lost rental income and business interruptions will be reportable payments.
  • Non-Economic Loss: Payments made in 2026 to residents of eligible properties (excluding physical injury or loss of life, as noted above).

ATTORNEYS’ FEES
If you’re represented by counsel, SCE will pay 20% to the net damages portion of an offer and provide a copy of Form 1099-MISC to the attorney that reflects 100% of the payment. If any part of the payment is reportable, both you and your attorney will receive the form for those amounts.

WHAT SHOULD CLAIMANTS DO?

  • Consult a Tax Adviser: Since taxability depends on your unique situation, it’s important to talk to a qualified tax adviser.
  • Keep Your Forms: Save any Form 1099-MISC you receive and share them with your tax adviser.

SCE’s reporting requirements are based on IRS mandates and do not determine whether your compensation is taxable. If you have questions, please reach out to a tax adviser for guidance.

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The terms and values of the Protocol govern the program. This program is a voluntary settlement initiative offered to claimants to provide a prompt and certain process for resolving disputed claims. Participation in the program does not constitute an admission of liability or wrongdoing, and the company expressly denies responsibility for the underlying events. All rights, defenses and legal positions in pending and future litigation are fully reserved. This program is offered solely as a compromise and is intended to be protected under applicable laws, including California Evidence Code sections 1152 and 1154.