Tax Refund

IRS says taxpayers in many states will not need to report special payments on 2022 tax returns. In guidance issued late Friday, the agency said it won’t challenge the taxability of payments related to general welfare and disaster. That accounts for payments made by 21 states in 2022. But the IRS said filers in Georgia, Massachusetts, South Carolina, and Virginia will have to report state payments as income unless the recipient received a tax benefit in the year the taxes were deducted. The IRS also said that many filers in Georgia, Massachusetts, South Carolina, and Virginia won’t have to claim the payments as income, but circumstances could differ for some households.

IRS Commissioner nomination hearing in Senate Finance this week. On Wednesday the panel will hold a hearing to consider the nomination of Daniel Werfel to serve as IRS Commission for the term expiring on Nov. 12, 2027. Expect the $80 billion in new agency funding from the Inflation Reduction Act to feature prominently.

The House Ways & Means Oversight Subcommittee wants to hear from tax professionals. Subcommittee Chair David Schweikert of Arizona says he wants to understand how the IRS conducts its business and how it could improve with good use of data. He told TaxNotes (paywall), “This is less about beating the crap out of the IRS. It’s more about what’s wrong. What can we help fix? What can we make more efficient?”

Will Montana’s tax-exempt hospitals face more oversight? The state is trying to increase oversight of tax-exempt hospitals to determine how they provide benefits to their communities in exchange for millions of dollars in tax breaks. The Montana Department of Public Health and Human Services is advocating for legislation that would authorize it to create higher standards and reporting requirements for those community benefits. Officials say that current information reported by nonprofit hospitals is insufficient. The Montana Hospital Association is recommending changes that would reduce state oversight. 

Did you bet on the big game last night? The American Gaming Association estimated that 20 percent of American adults—about 50 million people—bet more than $16 billion on Super Bowl LVII last night. For those who win, that money counts as taxable income. If they itemize their deductions when filing, they can deduct gambling losses from their winnings.


For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].

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