IRS Releases FAQs on Taxability and Reporting of Payments from Coronavirus State and Local Fiscal Recovery Funds
The IRS recently released frequently asked questions and answers (FAQs) regarding Coronavirus State and Local Fiscal Recovery Funds (SLFR Funds). The FAQs (FS-2021-16) detail the tax consequences for individual recipients and the reporting requirements for the states and local governments and employers, as applicable.
Some SLFR Fund recipients may have to report certain payments as income and may owe tax depending on the purpose of the payment. The FAQs also provide answers regarding payments used to assist with childcare or other basic needs.
States and local government administrators will find answers regarding their filing requirements, including when Forms 1099 need to be filed.