Arizona Attorney General Challenges IRS Tax Decision
Dispute Over Governor’s Rebate Program
According to Thomson Reuters. Arizona’s Attorney General, Kristin Mayes is upset with the IRS because they want to tax a one-time rebate for people in Arizona with kids. Mayes thinks the IRS decision is not fair to Arizona and its people. The rebate part of Governor Katie Hobbs’ 2023 budget, gives money to people with dependents, but the IRS says it should be taxed. Mayes filed a complaint on February 21, saying the IRS is being arbitrary and unfair.
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Arizona’s Battle to Protect Family Rebates Raises Questions on State Authority and Federal Taxation Policies
The argument is about the Arizona Family Tax Rebate, which gives $250 for kids under 17 and $100 for older ones, up to a maximum of $750 for three dependents. The IRS disagrees, saying these rebates should be taxed. Mayes argues that the IRS’s decision goes against their guidance from last year, where some state rebates related to COVID-19 were not taxed. The lawsuit suggests that Arizona taxpayers might have to pay $20.8 million to the IRS, and the state could lose around $480,000 in sales tax revenue. Mayes says she’s standing up for Arizona taxpayers and the lawsuit is about making sure the money meant for Arizona people stays with them. This legal fight adds confusion to the conversation between states and the federal government about how relief programs should be handled. It brings up questions about whether states have the power to give tax relief and how the federal government sees taxing such rebates.