IRS May Tax Massachusetts Refunds Sent In 2022 Under 62F Law

BOSTON, MA — Massachusetts residents who got a refund last year under the 62F law should hold off on filing their 2022 tax returns while the Internal Revenue Service sorts out whether it’s taxable, the agency has said.

Massachusetts was one of 19 states that offered various tax refunds or relief last year. The 62F refunds began going out to residents in November and were equivalent to about 13 percent of the previous tax year's liability.

“We are working with state tax officials as quickly as possible to provide additional information and clarity for taxpayers,” the IRS said in a recent statement.

The Massachusetts refunds were issued under a little-known 1980s law — 62F — that says tax revenue growth in the state can't exceed the sum of wages and salaries of all state residents in a given fiscal year. The state collected $41.8 billion in tax revenue in fiscal year 2022, which is $2.94 billion more than allowed under against the wages and salaries last year.

Some states — including Massachusetts — have said the payments aren’t subject to state income taxes. What needs to be determined is if they are taxable at the federal level, Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals, told The Associated Press

Taxpayers might owe the IRS if they received a tax refund in 2022 and itemized their deductions, including claiming state taxes, Keith Hall, president and CEO of the National Association for the Self-Employed, told The AP. An example of a state that is taking this route is Virginia, which has stated that taxpayers that filed a standard deduction will not be taxed for their tax rebate.

Other states that offered inflation relief in 2022 were Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina and Virginia.

Following the IRS recommendations is key if taxpayers want to avoid having to amend a previously filed tax return, according to Hall.

“I think the IRS is trying to help people save another filing, if they had to do an amended return,” Hall told the AP.

The 2022 federal income tax filing deadline is Tuesday, April 18. If you are not sure if you need to wait to file your taxes, Hall recommends you consult with a tax professional about your specific situation.

Related: What To Know About Filing Your 2022 Tax Return

The Associated Press contributed reporting.