Tax returns roll in as IRS decides if payments can be taxed

AUGUSTA, Maine (AP) — More than 100,000 tax returns have already been filed with the state even though the IRS advised Mainers to hold off until it decides whether relief checks issued last year should be taxed.

The Internal Revenue Service told residents in about 20 states where relief checks were provided they should wait until it makes a determination before submitting tax returns. In Maine, 115,901 tax returns were already submitted as of Thursday, state officials said.

Democratic Gov. Janet Mills pressed for the $850 pandemic relief checks last year for most Mainers as a historic surplus ballooned thanks in part to federal spending.

Her administration designed the relief program to conform with federal tax code to avoid being subject to federal taxes or included in federal adjusted gross income calculations, Sharon Huntley, spokesperson for the Department of Administrative and Financial Services, said Friday.

“Because of this specific design, the state does not believe the relief payments are subject to federal tax. The IRS has indicated that it is in the process of reaching its own determination, and we believe that the agency should conclude, too, that the payments are exempt,” she said.

The Portland Press Herald reported that state officials didn’t check with the IRS. The administration contended it doesn’t normally check with the IRS and that it was unnecessary to do so.

The IRS has given no indication of when it will make the decision, as 800,000 additional tax filers in Maine are left in limbo, but it said in a statement last week that it’s working “as quickly as possible to provide additional information and clarity for taxpayers.”

In the meantime, residents with questions are encouraged to consult with a tax professional since every person’s tax situation is different, Huntley said.

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