TAS Shares IRS’s Guidance on Taxability of State Tax Payments

February 21, 2023 -TAS is happy to report that the IRS has issued guidance on these special state tax payments. The guidance is complex. Because the taxability of these state payments varies depending on the type of payment and your state of residence, TAS urges you to carefully review the IRS-issued guidance

In her blog dated February 9, National Taxpayer Advocate Erin M. Collins noted that the IRS must issue guidance and provide education in a proactive and timely manner. Timely guidance is key to eliminating confusion and frustration for taxpayers and tax professionals, earning the trust of the American people, and providing quality service. One example relates to the federal tax treatment of special state tax refunds or payments to residents of 21 states.

TAS is happy to report that the IRS has issued guidance on these special state tax payments. The guidance is complex. Because the taxability of these state payments varies depending on the type of payment and your state of residence, TAS urges you to carefully review the IRS-issued guidance if you live in one of the following states:

Alaska
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Maine
Massachusetts
New Jersey
New Mexico
New York
Oregon
Pennsylvania
Rhode Island
South Carolina
Virginia

TAS will continue to monitor for further developments. We encourage you to review the IRS’s Important Tax Alerts and News webpage for further updates.

The post TAS Shares IRS’s Guidance on Taxability of State Tax Payments appeared first on Taxpayer Advocate Service.