sql-action V2 does not appear to be working with on-premises SQL Server

I have mentioned this to Drew Skwiers-Koballa casually in the past but thought better raise it here for visibility.

I seem to have issues using sql-action V2 to deploy to SQL Server on-premises. I am using a self-hosted GitHub Runner that works perfectly well with sql-action v1.3.

One of the types of errors I get is below, but it changes depending on which connection string format I use:

"Error: Failed to add firewall rule. Unable to detect client IP Address. unable to open tcp connection with host 'localhost:1433': dial tcp [::1]:1433: connectex: No connection could be made because the target machine actively refused it."

Maybe there is a workaround for using it with v2 that is not documented. However, for now I workaround it by using v1.3.