UPDATE, Feb. 10: The IRS has made a decision, and you will not pay federal taxes on last year’s TABOR refunds.
>> Read the new details, and what this means for filing
(NEXSTAR) – The Internal Revenue Service is telling millions of taxpayers, including those in Colorado, who received special state tax refunds or payments to delay filing their 2022 taxes.
“There are a variety of state programs that distributed these payments in 2022 and the rules surrounding them are complex,” the IRS said in a statement. “We expect to provide additional clarity for as many states and taxpayers as possible next week.”
The IRS said it is “aware of questions” surrounding the relief efforts that were crafted by states in different ways and under different rules.
For Colorado taxpayers, this is last year’s TABOR refund program named Colorado Cashback, which sent $750 in the late summer.
Colorado has also delayed processing returns and launching its free online filing service as it works through the impact of the TABOR refunds as well.
State tax refunds are expected to be announced by the end of this week for people who have already filed, and the Revenue Online service is expected to be available by the end of the month.
When can you expect your tax refund?
California had a similar program where people who met certain requirements received checks ranging from $200 to $1,050.
A spokesperson for the Franchise Tax Board (FTB) told Nexstar that as far as California state taxes are concerned, the MCTR is not taxable income, but noted that it “may be considered federal income,” leaving taxpayers in limbo and without official guidance from the IRS.
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“For taxpayers uncertain about the taxability of their state payments, the IRS recommends they wait until additional guidance is available or consult with a reputable tax professional,” the IRS advised.
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The two states are among 19 total that issued some type of special rebate or payment in 2022, according to the Associated Press. The full list consists of Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina, and Virginia.
“While this is unusual, this kind of determination in the middle of tax season isn’t unprecedented,” Adam Brewer, a tax attorney with AB Tax Law in San Diego, tells Nexstar. “In 2021, the IRS exempted the first $10,200 of unemployment benefits received in 2020 after many Taxpayers had already filed their income taxes and reported the income as taxable. This mid-tax season rule change may be following that precedent.”
“We expect to provide additional clarity for as many states and taxpayers as possible next week,” the IRS said in the statement, adding that the agency doesn’t recommend trying to call the IRS or amending a previously filed 2022 return before guidance is issued.
Addy Bink contributed to this report.