If the interest is being paid by a taxpayer and not the
municipality, it is taxable to you.

Nan, EA in LA

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Does anyone have any insight on how interest paid to me by
local municipalities on reedemed tax liens is treated for
federal and state income taxes? I have in the past just
reported it as taxable interest but some of my peers have
claimed that they are exempt from federal and state income
tax. I have read the IRS guidelines and the JK Lasker info
etc. They all talk about interest from "bonds" but these are
not bonds. They are liens I buy from the municipality. When
the taxpayer pays them off I get interest. That interest is
reported on a 1099-INT from the local municipality. Any
insight is greatly appreciated. BTW most are NJ
municipalities.

TIA,

Bob

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