IRS: You don't have to pay federal taxes on gas tax rebate

IRS: You don't have to pay federal taxes on gas tax rebate

The IRS now says you don't owe federal taxes on your gas tax rebate.

That guidance came out in the 3 p.m. hour on Friday. This development comes weeks after we began pushing for answers from the Franchise Tax Board which sent out 1099s for payments above $600.

The Franchise Tax Board said you don't owe state taxes on the middle-class tax refunds, or gas tax rebates, but you may owe the feds.

Local tax professionals thought the payments were exempt from federal under IRS tax code but wanted the IRS's guidance.

Last week, the agency said it was looking into it, and people should hold off filing if they have questions. The watchdog for the IRS yesterday called that unacceptable, especially since the rebates aren't a surprise. The IRS has known about them for months. 

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