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IRS Releases Statement After Warning State Residents Not to File Taxes Yet

Most residents whose states doled out some form of payment to account for rampant inflation will not have to report that income to the Internal Revenue Service.

The agency, which had asked residents in 21 states to hold off sending in their returns until officials could decide what should and should not be taxed, issued its decision on Friday.

In a summary of the IRS decision, The New York Times reported that the logic of the IRS was that payments for disasters or welfare are not taxable.

That’s good news for people in 16 states — California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island.

Alaska doled out supplemental payments that are not taxed, although its energy relief bonus checks will not be taxed.

It is a little trickier for people in Georgia, Massachusetts, South Carolina and Virginia, the IRS said in a statement.

“For these individuals, state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit,” the IRS said.

Jared Walczak, vice president of state projects at the Tax Foundation, took issue with the distinction, according to the Times.

He said those four states called their bonus checks refunds, which the IRS treats differently.

“It’s hard to understand why, after taking a generous, pro-taxpayer interpretation in most states, they insisted on a more formalistic interpretation in four,” he said.

Adam Markowitz, vice president at Luminary Tax Advisors in Windermere, Florida, told CNBC the decision was sound.

“This is the right ruling by the IRS. It’s unfair to punish taxpayers this late in the game if they were going to change anything,” he said.

But there could be an issue for California residents because the state already sent out 1099-MISC forms that classify its “Middle Class Tax Refund” as a taxable payment to the IRS.

“The state of California really did everyone a disservice by issuing 1099-MISC [forms],” said Dan Herron, a San Luis Obispo, California-based certified financial planner at Elemental Wealth Advisors.

If the state does not clarify this to the IRS then when residents file their tax forms, there will be a mismatch in what the IRS has on file for their income. Mismatches trigger notices to taxpayers that slow refunds.

“I don’t know how the IRS system is going to handle that,” Herron said.

It is also uncertain how the IRS will handle the returns of those who did not wait until it arrived at a solution.

Maine is just one example, according to ABC.

More than 100,000 tax returns already had been filed as of Thursday, the day before the IRS issued its clarification.

Democratic state Senate President Troy Jackson called the uncertainty caused by the IRS “harmful and irresponsible.”

“Democrats and Republicans worked together to create a program that would comply with federal tax laws and deliver for more than 800,000 Mainers,” he said.

READ 6 COMMENTS
  • DDearborn says:

    Hmmm

    How many of the states listed as being “eligible” for tax exemption voted Republican in the last election cycle?

    The IRS is again clearly being used to reward states that voted Democrat. This is hardly the first tax break given Democrat states by biden’s IRS. These blatant partisan payoffs by biden beg the question: Just how much tax revenue is/has been lost by biden’s political pay-offs?

    Do these pay-offs violate Federal election laws? or any other Statue prohibiting using Federal agencies for partisan political purposes?

    • Mary Krollzik says:

      Yup but he is Taxing the Waiters that get a couple off Dollar’s for servi ng Food, and Working hard and letting the lazy Bums off scotch free for Shleepping all Day, but then that is Joe Biden for you

  • John says:

    The only warnings the American people need is to know that they have Democrat corrupted domestic communist terrorists weaponized demons under the Democrat communist IRS party who will Target you if you speak your freedom and exerciser constitutional and Bill of Rights against their lying demonic Criminal communist Democrat Gestapo

  • Louis Galmarini says:

    Last year was my first full year on retirement. I’ve always had my taxes done before April 1st. I will continue to do so. FUCK YOU, IRS. YOU FUCKED ME WHILE I WAS EMPLOYED, AND YOU CONTINUE TO FUCK ME NOW I’M RETIRED. GO FUCK YOURSELF. I’LL FILE WHEN I WANT.

  • CAVALRYMAN says:

    It’s simple the IRS needs to go. They need defunded and we can send our taxes straight to the Treasury Department. Make it a flat tax not to exceed 10% and not to be valid if the federal government tries to impose an additional tax. Or, go with at consumption tax with the same parameters. Either way the IRS need to be defunded and dismantled.

    This is actually possible if enough citizens stand up and support a COS (Convention of States.) Though it is the largest grass roots organization in US history, with over 5-million, it is still not enough to get this done. If you haven’t had the opportunity for any reason, to serve your country, now is the time and COS is the way.

    (one word) CONVENTION OF STATES (dot) COM/?ref=65600.

  • IRS KissMyAss says:

    Every American should refuse to file any tax returns until the Obama Biden Treasonous Traitor Genocidal Regime Is Removed And Held Accountable For Crimes Against Humanity And The American People!!

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