DENVER (KDVR) — The IRS has decided that Coloradans will not have to report last year’s early TABOR refunds on their tax returns.
Colorado was among 21 states that made special payments to residents last year, and the IRS had urged people in those states to delay filing while it clarified whether that was taxable income.
“The IRS has determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns,” the IRS said in a statement. “During a review, the IRS determined it will not challenge the taxability of payments related to general welfare and disaster relief.”
This determination applies to Colorado and 16 other states.
The entire Colorado congressional delegation — both Democrats and Republicans, led by U.S. Rep. Joe Neguse — wrote a letter to the IRS. It said, in part, that taxing the TABOR revenue would break 30 years of precedent, as the Taxpayer Bill of Rights was passed in 1992.
“Expecting Coloradans to now pay part of these revenue payments back would impose a significant burden on colorado taxpayers,” the letter reads.
Gov. Jared Polis has also spoken with the acting commissioner of the IRS. He said in a statement, “I reminded the IRS commissioner that this is not taxable. It is money rightfully owed to Coloradans, and there are years of precedent on our side. Taxing these funds would hurt millions of Coloradans who deserve to save more money to help pay for groceries and everyday items. Our administration is ready to take any steps necessary to help keep people’s money in their hands.”