AUGUSTA, Maine — The administration of Gov. Janet Mills objected Tuesday to a reversal by the Internal Revenue Service that would tax $450 winter energy relief payments issued to Mainers in early 2023.
The IRS published guidelines this summer indicating the payments distributed between January and March to more than 880,000 people would not be subject to federal taxes before verbally informing Maine’s tax agency on Dec. 7 that they would be taxable, according to a Tuesday news release from the state Department of Administrative and Financial Services.
Finance Commissioner Kirsten Figueroa sent a letter Tuesday to an IRS lawyer asking the federal agency to not tax the $450 relief payments. Figueroa also noted the IRS told Maine Revenue Services it was not updating its guidelines following its apparent reversal and the federal agency declined to put the new decision into writing.
“We are concerned that Maine taxpayers and practitioners may not get this update in a timely manner, and that the IRS will hold taxpayers responsible for a decision the IRS is not even willing to put in writing or publicly announce,” Figueroa wrote to acting IRS Chief Counsel William Paul.
A DAFS spokesperson did not immediately have details on the average federal tax burden Mainers could now face on the $450 payments.
An IRS spokesperson did not immediately comment Tuesday on Figueroa’s letter, but the agency’s August guidance on taxing relief payments said it “applied only for payments made in 2022.” Figueroa wrote in her letter that an IRS liaison emailed the state’s revenue agency in September to say it appeared Maine’s $450 checks would not be subject to federal taxes.
Minnesota also recently objected to the decision by the IRS to apply federal taxes to its energy relief program.
Maine lawmakers approved the $450 relief payments, and Mills, a Democrat, signed the relief program into law in early January, with more than 99 percent of the payments issued to eligible Mainers by March 31 and prior to the end of the federal COVID-19 emergency on May 11, according to the state. The payments are not subject to state tax.
