Stauber Receives Final Answer from IRS on Walz Rebate Catastrophe
WASHINGTON, D.C. – After over a month of working to resolve the issue of Minnesotans being federally taxed on their state rebate checks, Congressman Pete Stauber (MN-08) received a final answer from the Internal Revenue Service (IRS). The IRS concluded that Minnesota’s state rebate checks would still be federally taxed due to the DFL-led state legislature’s failure to tie them to federal disaster relief.
Of this unfortunate decision, Congressman Stauber stated, “While I am disappointed with the overall outcome, I am grateful to IRS Commissioner Werfel and his team for working with my staff and myself on this issue. We had a shared goal to not double tax Minnesotans, but ultimately the IRS could not overlook the careless legislative mistakes made by the Governor and DFL-legislature. The fact remains that the state surplus was a result of out-of-control COVID-relief spending by Democrats in Washington. This taxpayer money was sent to state capitals around the country, and now it is being taxed. This is insulting to the hardworking people of Minnesota.
Stauber continued, stating, “Minnesotans are some of the highest taxed citizens in the United States, so it is a shame that the Governor and DFL-led legislature failed them. Last session, the DFL trifecta blew through a $17.6 billion surplus rather than putting this money back into the pockets of Minnesota’s families. This next year, they should focus on the needs of Minnesotans, rather than misguided priorities such as changing a perfectly good state flag or handing out drivers’ licenses and free healthcare to illegal immigrants on the taxpayer's dime.”
BACKGROUND:
1. After it was first announced that Minnesotans would be federally taxed on their rebate checks, Congressman Stauber immediately sent a letter to IRS Commissioner Werfel asking that he take sympathy on Minnesotans, who are some of the highest taxed citizens in the country. Read the full letter HERE.
2. Stauber and Commissioner Werfel then had a productive phone call on December 15, 2023. During the call, the following issues were identified with the state’s drafting of the tax legislation:
a.) The Walz Administration and DFL-legislature failed to pass their legislation before May 11th, which is the date the Biden Administration stated that exemptions related to the pandemic would end.
b.) The Governor and the DFL-legislature failed to make sure the language of their bill tied the tax rebates to disaster relief.
c.) When the IRS asked the Walz Administration and the Minnesota Department of Revenue to provide supporting evidence that the tax rebates were in connection to the national emergency, they dismissively sent hundreds of hours of floor debate video from the Minnesota legislature.
3. After his conversation with Commissioner Werfel, Stauber called Governor Walz and shared some options he and the Commissioner had discussed to get the rebate checks exempt. One suggestion was that the DFL authors of the tax bill send a letter to the IRS clearing up the intent of the tax rebates. Rather than working through the holiday to resolve this matter, the DFL authors waited until their holiday vacation was over to send the letter.
4. Congressman Stauber received a final decision from the IRS Commissioner, in which the letter stated that the legislation at the state level “did not provide the kind of clarity we need” and therefore did not meet the standard to not tax these state rebate checks. You can read the Commissioner’s letter to Congressman Stauber HERE.