Bennet Serves as Chair of Senate Finance Committee’s Subcommittee on Taxation and Oversight
Watch Bennet’s Questioning HERE
Washington, D.C. — Today, Colorado U.S. Senator Michael Bennet, the new chair of the U.S. Senate Finance Committee’s Subcommittee on Taxation and Internal Revenue Service (IRS) Oversight, questioned Danny Werfel, nominee for IRS Commissioner, on the recent clarification by the IRS that it would not tax Coloradans’ TABOR payments. The IRS clarification came a week after the agency asked Coloradans to defer filing their taxes, which caused mass confusion across the state. During today’s hearing, Werfel committed to working with Bennet and Colorado ahead of the next filing season to avoid a repeat of last week’s chaos.
“In 30 years, the IRS has never taxed these refunds for the vast majority of Coloradans. And Congress hasn’t passed any laws to change that. So the IRS announcement threw our entire filing season into chaos. And it would have hit my state with about $400 million in additional taxes, at a time when working families are already struggling with rising prices in this economy," said Bennet. “That’s why I called the Treasury Department and the IRS and demanded that they fix this. And over the weekend, the IRS clarified that it won’t tax last year’s TABOR refunds.”
Last week, after the IRS asked Coloradans to stop filing their taxes until they determined how to handle TABOR payments, Bennet called acting IRS Commissioner Douglas O’Donnell and urged him to continue the thirty year precedent of treating TABOR payments as nontaxable. Following Bennet’s call, the IRS announced its decision to not tax 2022 TABOR payments.
Bennet also questioned Werfel on the lessons he learned from the monthly distribution of the enhanced Child Tax Credit payments which Bennet secured in the American Rescue Plan.
Bennet’s questions are below.
“Two weeks ago, the IRS notified taxpayers in Colorado – in the middle of filing season – that they could face a tax on their state tax refund, which in my state we call TABOR refunds – Taxpayer Bill of Rights refund.
Coloradans receive TABOR refunds when the state collects more in taxes than we allow in state law—it’s a tax refund, not income.
In 30 years, the IRS has never taxed these refunds for the vast majority of Coloradans. And Congress hasn’t passed any laws to change that.
So the IRS’ announcement threw our entire filing season into chaos.
And it would have hit my state with about $400 million in additional taxes, at a time when working families are already struggling with rising prices in this economy.
That’s why I called the Treasury Department and the IRS and demanded that they fix this. And over the weekend, the IRS clarified that it won’t tax last year’s TABOR refunds.
But I should never have had to make that case, and people in Colorado should not have had to make that case – especially when they are in the middle of filing their taxes.
Mr. Werfel, I know you weren’t involved in this, otherwise I would have called you, but I want to put the issue on your list, because I am intensely interested in making sure we don’t repeat this again next year.
Will you commit to working with my office and the state of Colorado ahead of the next filing season, so that we aren’t inflicting needless chaos and confusion on my state?
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Even if you thought it was a good idea, which for the record I don’t think it's a good idea and thirty years of experience with the IRS tells us it’s not a good idea. But even if you did, the last time we should do it is when people are already filing. In fact the guidance that we got – incredibly – from the IRS was, “don’t file your tax returns until we…sort this out.” And again, I share Ben Cardin’s view that there are many hardworking public servants there. But that’s the example of the kind of self-inflicted wound that I think…makes people believe that there is just a fundamental nonsense in government. So I look forward to working with you on that.
Mr. Werfel, as you know, I’ve been in the Senate now for more than a decade, and the most important issue I’ve worked on is expanding the Child Tax Credit in 2021 -- along with my colleagues on this Committee, Chair Wyden and Senator Brown.
That one policy cut childhood poverty in half in America. It cut family hunger by a quarter in this country – a country that has the highest childhood poverty rate in the industrialized world, notwithstanding the fact that we are the wealthiest country.
It benefited – the Child Tax Credit – it benefited over 90% of kids in my state and all across the United States.
At the time, many people doubted the IRS could deliver the CTC on a monthly basis, but, to its credit, it did.
It wasn’t perfect, but about 90 percent of eligible children received the payments. My biggest disappointment is obviously that we let – Congress let – the expanded CTC expire.
And I still believe that we will eventually pass an expanded CTC. I’m glad there are members of the Republican caucus that have their own proposals. If you become commissioner, you will play a vital role in making this a success.
What lessons did you learn from the rollout of the expanded CTC in the American Rescue Plan that we should carry forward? And what steps would you take to make sure we deliver the CTC to every eligible family?”