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By Michael Shepherd - Feb. 10, 2023
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📷 A sign hangs outside the Internal Revenue Service building in Washington on May 4, 2021.(AP photo by Patrick Semansky)
Good morning from Augusta, where something apparently stinks. Reply to me with wrong answers about what it is. Here's the legislative committee agenda.

What we're watching today


Tax trouble could loom for Mainers because of the last round of relief checks. The IRS is urging taxpayers in Maine and 18 other states to delay filing income tax returns until the agency figures out whether state relief payments issued last year are going to fall under federal taxes, something that would put the administration of Gov. Janet Mills in a jam.

More than 100,000 Mainers have already filed state returns, meaning a similar amount of federal returns have been filed. The state did not check with the IRS while designing the $850 relief program, the Portland Press Herald reported today. The Mills administration has downplayed that fact, saying they never do it while designing programs but that they think they crafted this one correctly.

"The IRS has indicated that it is in the process of reaching its own determination, and we believe that the agency should conclude too that the payments are exempt," Sharon Huntley, a spokesperson for the governor's budget office, said Friday. "We encourage them to reach this conclusion swiftly so that Maine people, and others across the nation, may have certainty."

States with relief programs may be treated differently by the IRS, which issued a statement last week calling the rules around the programs "complex." Many tax experts think a strict reading of federal law would apply taxes to these payments, but popular tax software companies including TurboTax have concluded that they will not be taxed and have submitted returns as such.

It is unclear when the IRS guidelines will come down. However, the situation most threatens lower-income Mainers who have already filed their taxes and risk a major delay on their return if the relief payments end up being taxed.

This may end with the Biden administration or congressional delegation getting involved, but there are major complications in play for these states. If these relief payments are taxed, the round of $450 heating aid checks going out now almost certainly will be as well, threatening to dampen the relief effects.
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News and notes

📷 Snow covers Capitol Park in front of the State House in Augusta on Dec. 29, 2021. (BDN photo by Troy R. Bennett)

 

💰 One state budget is negotiated with a much bigger one to go.

◉ A smaller and short-term portion of Gov. Janet Mills' January spending proposal was unanimously voted out of the appropriations committee on Thursday and should go to the Legislature next week for passage.

◉ Among the highlights are tens of millions of dollars in payments to hospitals and nursing homes, as well as $5 million in aid to cities and towns, as recommended by the health committee. There were major funding requests for Maine's embattled low-income legal defense program and guardians ad litem, but money was found in the current budget to meet immediate needs.

◉ Hearings on the $10.3 billion two-year budget began this week and will consume much of the Legislature's work between now and the end of June.

📺 Fox News hosts a mother battling a Maine school on LGBTQ issues.

◉ Fox News host Laura Ingraham said on her Thursday show that she will air an interview on Friday with Amber Lavigne, a Newcastle mother at the center of an incident gaining traction in the national conservative media sphere during a wide debate over schools and gender identity policies.

◉ Lavigne spoke at a school board meeting in December, telling members that a staff member at Great Salt Bay Community School gave her 13-year-old a device used to minimize the feminine appearance of the chest.

◉ She declined to speak with the BDN last month. In a recent interview with the conservative Washington Times, she demanded the firing of that employee. She also is being represented by a conservative legal group that says her constitutional rights were violated.

◉ School officials have responded by vaguely saying there is a "false narrative" spreading about the case while saying they are barred from discussing it in detail due to confidentiality laws. They have also blamed conservative media attention for bomb threats in December and January.
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What we're reading


🛩 Sen. Susan Collins said the spy balloon response weakened U.S. deterrence.

📈 Regulators will investigate Electricity Maine over sharp rate hikes.

🛍️ Walmart settled two property tax disputes in Maine after losing appeals.

🚑 Four Bangor-area restaurants and bars were sued over a fatal crash.

🤎 Mud season is coming. Here's our guide to it, and here's your soundtrack.
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