DENVER - Governor Polis released a statement following an absurd potential decision by the Internal Revenue Service (IRS), which is changing a thirty-year interpretation of the Tax Payer Bill of Rights (TABOR).
Earlier this year, the Polis administration applauded the IRS’s decision to uphold the 30-year precedent of not taxing these refunds and will continue to advocate that they not be taxed in future years. Gov. Polis urged the IRS Commissioner to avoid taxing the money rightfully owed to Coloradans but today the IRS issued new guidance that related to this issue.
“This absurd potential action from the IRS would cost Coloradans money and confuse people, and I call on the Biden administration to reverse course. The IRS is proposing going back on thirty years of not treating TABOR refunds as taxable income. Our administration strongly disagrees with the IRS guidance as it fails to factor in that TABOR refunds are returning sales tax dollars in addition to income tax dollars and fees that our citizens have already paid and therefore are an entirely legitimate tax refund and should not be subject to further state or federal taxation," said Governor Polis.
The state of Colorado has been doing some form of a TABOR refund mechanism for 30 years in those years when the state’s revenues exceed the revenue cap and it refunds to taxpayers under TABOR, regardless of the form they take, has never been taxed before by the IRS.
Coloradans who have questions related to how this new IRS change may impact their 2023 income tax filings may contact the IRS for more information at www.irs.gov/help.
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