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Taxpayers from 21 states are Still Waiting for IRS Announcement Regarding the Special Tax Refunds or Payments

Taxpayers from 21 states still await the IRS instruction regarding the special tax refund they received last year.
Taxpayers from 21 states still await the IRS instruction regarding the special tax refund they received last year. (Photo: Bloomberg)

The IRS stated on February 3 to advise the taxpayers to hold their filing until they provide “additional clarity” regarding the special payments.

 

The National Taxpayer Advocate Erin Collins denounced the IRS Thursday for leaving taxpayers and tax professionals without guidance concerning special payments and refunds. She said the IRS has known for months about the uncertainty about the special state tax refunds or payments and yet left tens of millions of taxpayers on their own. The IRS has yet to issue specific guidance, leaving taxpayers to wait to file their returns, as reported by The Tax Adviser.

The IRS has consulted with a tax group on whether the special tax refunds or payments made by 21 states in 2022 should be taxable for federal purposes. The special payments were sent to taxpayers as part of the state pandemic relief measures.

The IRS has still not determined whether the special tax refund by the 21 states should be considered taxable or not.

The IRS has still not determined whether the special tax refund by the 21 states should be considered taxable or not. (Photo: CBS News)

The Federation of Tax Administrators (FTA) said the IRS has inquired about programs in 21 states:

Arizona Maine
California

Massachusetts

Colorado Minnesota
Delaware New Jersey
Florida New York
Georgia Oregon
Hawaii Pennsylvania
Idaho Rhode Island
Illinois South Carolina
Indiana Virginia

Find Out: IRS: Taxpayers won’t Need to Report Middle-Class Tax Refund as Income 

More: California Middle Class Tax Refund: IRS Says It’s Not Taxable 

Joe Starr, FTA communications manager, wrote in an email to the JOFA that the FTA will continue to work on this matter, and they are also awaiting the IRS’ decision as the peak of filing season is drawing near.

 

Meanwhile, Kenneth Corbin, IRS officer and its Wage and Investment Division commissioner in California, clarified that the middle-class tax credit would not be taxable. Another ten states that issued the special payment will not be taxable on a federal tax return. However, he did not specify how to report the special payment on the return.

Read More: Middle Class Tax Refund Most Frequently Asked Questions Now Answered! 

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