DENVER — Colorado's congressional delegation on Wednesday once again urged the Internal Revenue Service not to treat refunds issued under the state's Taxpayer's Bill of Rights as taxable income.
In a letter led by U.S. Sen. Michael Bennet and Assistant House Minority Leader Joe Neguse, every member of the state's delegation asked IRS Commissioner Danny Werfel to stick with the approach the agency has taken for more than three decades, since voters approved the revenue-limiting state constitutional amendment known widely as TABOR.
The lawmakers said they are concerned the IRS could be considering treating refunds issued this year by the state — $800 for individual filers and $1,500 for joint filers — as taxable income, reversing an interpretation the agency took last year when it came to the opposite conclusion about previous flat-rate refunds.
In recent years, the state has distributed one-size-fits-all refunds to Colorado taxpayers as a way to return much of the state's excess revenue for the previous fiscal year, as required by the 1992 amendment. The federal lawmakers note in their letter that the state legislature earlier this year changed the mechanism for distributing TABOR surpluses to comply with existing IRS guidance on what's considered taxable, so the question isn't expected to return in subsequent years.