I'm no MA expert but from google it looks like you got ~14% of your tax back (but I don't believe everything I read on the Internet).  Sounds to me like you only got money back if you paid in.  I would conclude that this is a tax refund, subject to the tax benefit rule (as SJR said).  I'm not holding up VA returns, VA reported the refunds on the 1099-G so they clearly think this is a tax refund (and I agree with them).  I suspect MA will be the same.