UPDATE | 4:16 p.m. — The IRS announced Friday afternoon that it would not require Coloradans to pay federal income tax on expedited tax refunds that they received last year.
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On Friday, the entire Colorado legislative delegation led by Congressmen Joe Neguse and Ken Buck signed a letter calling on the Internal Revenue Service to treat TABOR payments as nontaxable income.
This comes after theIRS called on people in states that receive special tax refunds, including Colorado, to wait to file until the government agency provides what it called additional guidance or ‘clarification on state payments’.
In the letter, the congressional delegation urged the IRS to ‘honor long-standing regulatory practice and treat the revenue payments as nontaxable income.’
TABOR, or Taxpayer Bill of Rights is an amendment approved by voters in 1992 that returns surplus revenue back to Colorado taxpayers.
“It is incomprehensible that the IRS would threaten to take money out of the hands of hardworking Coloradans,” said Neguse in the letter.
“For thirty years, these TABOR revenue payments have rightfully made their way to families throughout our communities without the IRS raising any issues. We must ensure the IRS does not impede the revenue structure that Colorado voters have adopted, which would not only create confusion in the middle of tax season but impose significant cost burdens on Colorado taxpayers.” Neguse continued in the release.
Buck's office also shared the letter to IRS acting commissioner Douglas O'Donnell which referred to how the agency has previously handled TABOR payments.
'Historically, the IRS has never considered such payments as taxable income since the amendment was ratified in 1992—over thirty years ago. Expecting Coloradans to now pay part of these revenue payments back would impose a significant burden on Colorado taxpayers, introduce considerable compliance costs for taxpayers who did not anticipate having to add their TABOR revenue payments to their joint or single filings, and cost Coloradans hundreds of additional dollars in tax liability.'the letter stated.
In a February 3 announcement, the IRS said it expected to ‘provide additional clarity for as many states and taxpayers as possible next week.’
The letter to the IRS was signed by Senators Bennet, Hickenlooper and representatives DeGette, Crow, Caraveo, Petterson, Buck, Boebert and Lamborn.
