The IRS released a very short FAQ to provide two answers related to the taxation of provider relief payments from the Provider Relief Fund created by the CARES Act.[1]

The web page describes the program as follows:

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, appropriated $100 billion for the Public Health and Social Services Emergency Fund (Provider Relief Fund). The Paycheck Protection Program and Health Care Enhancement Act, enacted on April 24, 2020, appropriated an additional $75 billion to the Provider Relief Fund. This funding will be used to reimburse eligible health care providers for health care-related expenses or lost revenues that are attributable to the COVID-19 pandemic. See https://www.hhs.gov/provider-relief/index.html for more information about the Provider Relief Fund.

Taxpayers who receive these funds may wonder about their tax status—are these payments taxable income or not?

In yet another set of Frequently Asked Questions on the IRS website, the IRS clarified the tax treatment of funds received by students under provisions of the CARES Act that allows the use of certain funds allocated by the Department of Education to support students.[1]

The IRS cites IRC §139 provisions to support the tax treatments outlined. This provides additional indirect support for those looking to potentially take advantage of §139 to provide tax free relief payments to employees and other parties, as this implicitly finds that the COVID-19 emergency meets the definition of a disaster that is covered by §139.