Tax Expert Says IRS Announcement is Unprecedented
Tax Expert Says IRS Announcement is Unprecedented (Washington, DC) (via The Center Square) — The Internal Revenue Service is asking Illinois taxpayers to hold off on filing their 2022 taxes, a move that may be a first.
Last year, Illinois and 18 other states offered inflation relief payments or refunds for taxpayers and now the IRS is uncertain about the taxability of the payments.
“The IRS is aware of questions involving special tax refunds or payments made by states in 2022; we are working with state tax officials as quickly as possible to provide additional information and clarity for taxpayers. There are a variety of state programs that distributed these payments in 2022 and the rules surrounding them are complex,” the IRS said in a statement.
Tom O’Saben is a tax expert in Glen Carbon and is the director of Tax Content and Government Relations with the National Association of Tax Professionals. He can’t recall the IRS making a similar request.
“I know when we had the American Rescue Plan back in 2021 and we got that late guidance on the part of unemployment being excluded, but I have been doing taxes for 32 years, I am not aware the IRS has said to wait on filing,” O’Saben told The Center Square. “It’s nearly unprecedented, yes.”
Maura Kownacki, spokesperson for the Illinois Department of Revenue, said it is a little more cut-and-dry in Illinois.
“The Illinois tax rebates are not subject to Illinois income tax, and the Internal Revenue Service has not determined if they will be taxed at the federal level,” Kownacki told The Center Square.
The IRS is also recommending to those who have already filed their tax returns not to file an amendment. O’Saben agrees with that advice.
“For those who have already filed their returns, don’t do anything,” said O’Saben. “We believe that for more than 90% of the population, it is probably a nonevent.”
The IRS is expected to clarify the situation in the coming days.
Tax Expert Says IRS Announcement is Unprecedented
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