Bill to refund Oregon taxes on federal stimulus payments stalls in the legislature

An estimated 870,000 Oregonians owed more in state taxes because of the two Economic Impact Payments (EIP) issued in 2020, with more to come next year due to the third payment that came in 2021.

Posted: Jun 24, 2021 4:56 PM
Updated: Jun 24, 2021 5:09 PM

SALEM, Ore. — When the federal government began offering stimulus payments to Americans during the COVID-19 pandemic, they were not intended to be taxed at either the federal or state level. Due to a quirk of Oregon's particular tax code, however, many of them were.

An estimated 870,000 Oregonians owed more in state taxes because of the two Economic Impact Payments (EIP) issued in 2020, with more to come next year due to the third payment that came in 2021. According to Senate Republicans, those additional taxes amounted to roughly $300 million.

Earlier this year, lawmakers designed a bill that would refund these additional taxes back to Oregonians who were penalized by the stimulus payments, Senate Bill 842. Despite widespread support for the bill, however, it has remained stalled in the Senate committee on Finance and Revenue.

Republican Senator Dick Anderson, who introduced the bill in March, attempted to bring the bill up for debate on Thursday and was rebuffed by Democrats.

“I am a former mayor,” Senator Anderson said. “I am used to passing common-sense, bipartisan ideas that fix unintended consequences. It's extremely disappointing that partisanship got in the way of this bill. There is no defensible reason to be taking part of Oregonians’ stimulus checks, especially given Oregon’s current financial position.”

Senate Republicans cited a letter that U.S. Representative Peter DeFazio, a Democrat, penned in February, urging Governor Kate Brown and Democratic leaders in the legislature to return the taxes on stimulus checks.

When lawmakers heard comment on SB 842 in April, one of the only speakers to express significant concerns about the bill was Betsy Imholt, director of the Oregon Department of Revenue.

Imholt explained the major pressure her department was under due to ongoing COVID-19 impacts; an ongoing tax season with the deadline pushed back to mid-May, in addition to the sudden project of quickly refunding taxes levied on unemployment checks during the pandemic. Imholt said that Revenue staff were already working overtime to meet these crucial deadlines.

"The most practical path to implement Senate Bill 842 would be for this reduction — to build it into next tax season," Imholt said. "By making the correction next tax season, we can build the forms, instructions into our planning right now, and work with the e-filing vendors to automatically calculate the correction. We can do the correction both for 2020 and 2021 at the same time . . . this would be simple for taxpayers, and it would be most efficient on our end as well."

While the reasoning for Democrats' decision to oppose advancing the bill is unclear, Imholt's arguments may have prevailed, opening up the possibility that refunds for the 2020 payments will appear when taxpayers file in 2022.

“Democrats blocking this legislation shows Oregonians exactly where their priorities are,” Senate Republican Leader Fred Girod said. “This money belongs in the pockets of Oregonians. It is only right to return it to them. I hope that Democrats will find it in their hearts to move this legislation during the next session.”

Oregon Coronavirus Cases

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Reported Deaths: 4284
CountyCasesDeaths
Multnomah55810707
Washington38782324
Marion36837455
Clackamas29779309
Lane27744302
Jackson23059310
Deschutes20336125
Umatilla14492150
Linn12911131
Douglas12118243
Josephine9384196
Yamhill8715113
Klamath8020119
Polk737381
Malheur563677
Benton549431
Coos503794
Columbia382644
Jefferson376052
Lincoln319939
Union319549
Crook291846
Wasco288841
Clatsop244328
Baker203529
Tillamook196932
Hood River192837
Morrow185023
Curry180625
Harney113927
Grant100013
Lake93912
Wallowa68612
Gilliam1544
Sherman1523
Wheeler1121
Unassigned00

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Cases: 4852216

Reported Deaths: 71350
CountyCasesDeaths
Los Angeles148510526549
Riverside3716705041
San Diego3678574183
San Bernardino3586775692
Orange3242885562
Sacramento1596362309
Kern1463481648
Fresno1463182094
Santa Clara1455431897
Alameda1206921400
San Joaquin1027761721
Ventura1010381167
Contra Costa1000181008
Stanislaus862991335
Tulare80375978
San Francisco54440649
San Mateo54168623
Monterey50911586
Solano46063341
Santa Barbara45223523
Merced42422581
Sonoma40997404
Placer39435429
Imperial36071766
Kings32938325
San Luis Obispo29973333
Madera23955285
Shasta23924352
Butte23818273
Santa Cruz21034221
Yolo20397248
Marin17706244
El Dorado17207149
Sutter13937175
Napa12898100
Yuba1011582
Tehama9534110
Humboldt9269109
Nevada916790
Mendocino766787
Lassen754347
San Benito744972
Tuolumne691790
Lake6631105
Amador547364
Siskiyou451246
Glenn438433
Calaveras391481
Del Norte358742
Colusa307618
Inyo214241
Mono16723
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Trinity88011
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Unassigned1460
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