Rep. Neguse calls on IRS to treat TABOR payments as nontaxable income

By Joe Neguse, U.S. Rep. Colorado 2nd District Redstone Review

dent for the past thirty years.

Neguse as has been prece-

This push comes just days after the IRS alerted Coloradans to hold off on filing their taxes until they determine how to best handle the payments. In a letter to the Commissioner of the IRS Douglas O’Donnell, Rep. Neguse and his colleagues implored the agency to honor long-standing regulatory practice and treat the revenue payments as nontaxable income.

Neguse said, “It is incomprehensible that the IRS would threaten to take money out of the hands of hardworking Coloradans.” He previously served in the Governor’s Cabinet as Director of Colorado’s regulatory agency.

LAFAYETTE — Colorado Congressman Joe Neguse, who previously served as Executive Director of Colorado’s Department of Regulatory Agencies from 2015 to 2017, led the entire Colorado delegation in calling on the Internal Revenue Service (IRS) to continue treating Colorado Taxpayer’s Bill of Rights (TABOR) revenue payments as nontaxable income

The letter was co-signed by the entire Colorado delegation, including U.S. Senators Michael Bennet and John Hickenlooper, and Representatives DeGette, Crow, Caraveo, Pettersen, Buck, Boebert, and Lamborn.

For thirty years, these TABOR revenue payments have rightfully made their way to families throughout our communities without the IRS raising any issues. We must ensure the IRS does not impede the revenue structure that Colorado voters have adopted, which would not only create confusion in the middle of tax season but impose significant cost burdens on Colorado taxpayers.

The TABOR Amendment was approved by voters in 1992, and since that time, the State of Colorado has refunded excess revenue generated by the state to the taxpayers.

Read the full letter below:

Friday, February 10, 2023

The Honorable Douglas O’Donnell Acting Commissioner, Internal Revenue Service

1111 Constitution Ave NW Washington, DC 20224

Dear Acting Commissioner O’Donnell: We write to urge your agency to treat Colorado Taxpayer’s Bill of Rights (TABOR) revenue payments as income –keeping with previous Internal Revenue Service (IRS) precedent for the past thirty years. Recent public reports indicate that your office has asked Coloradans to delay filing their taxes until a final determination has been issued with respect to these payments. We hope that your agency can resolve this in a timely manner to avoid further confusion within our state.

In 1992, Coloradans approved an amendment to the state constitution, commonly referred to as the Taxpayer’s Bill of Rights (TABOR), to limit the amount of revenue withheld by the state and instead refund excess revenue back to the taxpayers. In 2022, these revenue payments were $750 for single-filers and $1,500 for joint-filers. Historically, the IRS has never considered such payments as taxable income since the amendment was ratified in 1992 – over thirty years ago.

Expecting Coloradans to now pay part of these revenue payments back would impose a significant burden on Colorado taxpayers, introduce considerable compliance costs for taxpayers who did not anticipate having to add their TABOR revenue payments to their joint or single filings, and cost Coloradans hundreds of additional dollars in tax liability.

Of additional concern is the timing of this announcement. A late announcement during tax season will cause Coloradans unnecessary stress as they prepare to file. Moreover, as you know, regulatory stability and transparency promote compliance, whereas sudden changes with thin justification do not. Potential new rules promulgated within months of the filing deadline, with the possibility of costing taxpayers a significant amount of money, would impose unnecessary financial distress on countless Coloradans.

In sum, we respectfully request that the IRS continue to treat TABOR revenue payments as non-taxable, as you have in previous tax years, and that your agency promptly announce the same. We appreciate your prompt attention to this matter. Sincerely.

Congressman Joe Neguse represents Colorado’s 2nd District in the U.S. House of Representatives. He was elected to his first term in November 2018, becoming the first African-American member of Congress in Colorado history. He serves as a member of the House Judiciary Committee, the House Natural Resources Committee and the House Select Committee on the Climate Crisis.