State begging IRS to not tax Coloradans for TABOR refunds
DENVER, Colo. (KRDO)--The Internal Revenue Service is still deciding if special tax refunds made by states in 2022, should be taxed federally. That includes 18 states, and the Taxpayer Bill of Rights in Colorado, also known as TABOR. The Colorado Department of Revenue is pleading its case to the IRS, saying TABOR refunds shouldn't be taxed, in part, because they never have been.
TABOR checks were mailed out for $750 for single filers and $1500 for dual filers. After the passing of Senate Bill 22-233, 'Colorado Cashback' checks were pushed out early, and at a time when other states sent out stimulus checks in response to inflation. Those stimulus checks or rebates are not the same as TABOR, which is excess tax revenue, and written into the Colorado Constitution. Essentially, money citizens paid in taxes, but the state didn't use and is obligated to send back. Now, Colorado has been lumped in with those states in the IRS review.
When Senate Bill 22-233 passed, Colorado Governor Jared Polis and state lawmakers celebrated they were able to send out the checks earlier than anticipated. The checks were mailed in August and September 2022, instead of April 2023. At the time, critics pointed out that the sending of the checks was moved up in front of the 2022 November election. Polis, though, said it was to help Coloradans quicker financially.
The Colorado Department of Revenue would not confirm if the timing of the TABOR checks or the method in which they were presented was a factor in the IRS review. TABOR refunds haven't been taxed in its entire 30-year history.
The IRS is asking people in the 18 states, including Colorado, to delay filing until it comes to a decision. Polis' office didn't answer KRDO's request for an interview, and forwarded questions for Polis to the Colorado Department of Revenue.
The Department of Revenue issued a statement Thursday, saying it strongly believes the refunds are nontaxable.
Now, Coloradans wait to hear if the IRS believes it would be double dipping, or if it'll tax Coloradans on their $750 refund.
