Colorado Leaders Urge IRS to Preserve Tax-Free Status of TABOR Refunds
Congressional Representatives Warn of Financial Strain and Confusion if TABOR Refunds Are Taxed
According to The Center Square Colorado, Colorado’s Congressional leaders are urging the IRS to keep Taxpayer’s Bill of Rights (TABOR) refunds from being taxed. In a letter to IRS Commissioner Danny Werfel Both Democrats and Republicans in Congress pushed for these returns to stay tax-free.
They are afraid that any new IRS rules that say TABOR refunds are taxed income could make people confused and put Coloradoans in financial trouble. The letter points out that these refunds have not been taxed for 30 years and that changing this would hurt the state’s finances and make things harder for people who don’t need them to be.
For the fiscal year 2022–2023, TABOR refunds will be between $800 and $1,600. In the past, these refunds have not been taxed by the federal government. This has been done this way since 1992, when Colorado voters passed TABOR refunds.
Colorado’s federal lawmakers say that changing how these refunds are taxed would cause a lot of problems for state revenue officials and could mean that residents, especially low-income people who count on these refunds, get tax bills they didn’t expect. Many people might have a harder time if the tax rules are changed, they think.
Colorado Leaders Demand Clarity from IRS to Prevent Disruption of TABOR Refund System
The IRS’s 2023 rules say that most state tax returns are not taxed unless certain conditions are met. This is especially true for people who claim itemized deductions. But leaders in Colorado are worried that adding new tax rules to TABOR refunds could make things more complicated and break the system as it is now.
They say that letting people know and changing how states handle refunds would take a lot of time and money. The leaders of Congress are pushing for a clear answer so that Colorado residents don’t have to deal with extra tax problems.