IRS responded to Commissioner Figueroa's recent letter correcting their decision and confirming energy relief payments will not be subject to Federal taxation.
In response to an appeal from the Mills Administration, the Internal Revenue Service (IRS) announced today that Maine's $450 Winter Energy Relief Payments will not be subject to federal tax.
In a letter sent to Commissioner Kirsten Figueroa of the Department of Administrative and Financial Services, the IRS Acting General Counsel wrote, "the payments do qualify for the exclusion from income for qualified disaster relief payments under Internal Revenue Code section 139(b)(4)."
The decision to not Federally tax the payments comes in response to pressure from the Mills Administration. DAFS Commissioner Figueroa objected in a letter (PDF) to the IRS's verbal ruling and urged the IRS to not tax the payments.
"We are thankful to the IRS for arriving at the right decision and for their prompt response as Maine taxpayers prepare for the upcoming tax season," said Governor Mills and Commissioner Figueroa in a joint statement. "These payments were intended to provide financial relief to Maine people dealing with high energy prices, and we're glad that money will stay in their pockets where it belongs."