Commission approves hardship abatement after life‑insurance 'phantom income' pushed applicant over eligibility

The commission reviewed a hardship abatement case in which an applicant’s 2025 tax return included reported income tied to a life-insurance loan default after the spouse died. Staff said the reported amount—described as "phantom income"—pushed the applicant above the eligibility threshold for circuit-breaker or similar relief.

Chanel described the circumstances and said she had consulted the state tax commission, which indicated the case could be considered under hardship provisions. "The income was actually probably received several years ago, not in 2025, but it pushed her over the limit in 2025," she told the commission. Staff recommended treating the matter as a hardship case, which affords the commission additional discretion to defer, forgive, or partially abate taxes.

Commissioners debated options, including formal deferral (which requires record-keeping) and forgiveness; one commissioner suggested deferral might increase administrative burden, while another said relief was warranted in this instance given the family circumstances. After discussion the commission approved relief for the applicant and directed staff to document the decision and review deferral policy options for future cases.

During the discussion one commissioner described the underlying loss as a scam; staff confirmed the applicant previously received relief in prior years and that the unusual tax reporting resulted from loan/default accounting rather than recent income-generation.