The good news is congress is considering a waiver of taxes on foreclosed
properties and it should also include short sales . contact your U.S. representative's
office to see where this is in the pipeline.
This is something that should have been covered BEFORE the lender agreed to a short sale. Based on your post, my bet is that you will be 1099'd for the balance.
The shame is that you perhaps have avoided that. You should also ask how it will read on your credit report. That is also something that should have been agreed to before proceeding.