IRS Exempts Maine’s Energy Relief Payments from Federal Tax

The Internal Revenue Service (IRS) has declared that Maine’s winter energy relief payments, amounting to $450, will not be taxed federally. This decision marks a significant turnaround following an appeal from the Mills administration.

Earlier in December, during a conversation with the Maine Department of Administrative and Financial Services, the IRS initially indicated that these payments, distributed to over 880,000 Maine residents between January and March, would be taxable. This stance prompted immediate action from the Mills administration.

Kristen Figueroa, Commissioner of the Department of Administrative and Financial Services, penned a forceful appeal to the IRS on December 12. Her letter expressed deep disappointment and concern, contrasting this decision with previous exemptions granted for pandemic-related state and federal relief efforts.

Figueroa’s letter highlighted the timing of this decision as particularly troubling, coming just before the onset of Maine’s harsh winter and the tax season. “On behalf of the taxpayers of the State of Maine, I am deeply disappointed by this apparent reversal and remain frustrated with the lack of clarity from the IRS,” Figueroa stated.

The IRS, responding to this appeal, confirmed on Friday that the energy relief payments would indeed be exempt from federal taxes. This decision was met with praise from the Mills administration.

In a statement to NEWS CENTER Maine, an IRS spokesperson clarified, “The IRS understands the concerns of Maine residents and assures taxpayers that their state payments to lower the cost of winter energy bills are not taxable under federal law.” The IRS has communicated this to Maine officials, providing clarity and an explanation on the legal nuances of this complex issue.

Governor Janet Mills and Commissioner Figueroa released a joint statement expressing their gratitude: “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. 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.”

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