Arizona Rebate vs. IRS Rules
Arizona’s Refund Challenge with the IRS Over Taxation
Arizona’s Refund Challenge with the IRS. (PHOTO: AARP)
Arizona and the IRS are in dispute over whether Arizona’s tax refund should be subject to federal taxation. Arizona argues that the refund, meant to aid those who owe state income taxes and have dependents, shouldn’t be taxed as it comes from the state’s general fund. The IRS contends that the refund doesn’t meet exemption criteria since it benefits individuals across income brackets. Despite Arizona’s comparisons to similar refunds in other states the IRS maintains its stance on taxing Arizona’s refund according to the article of Thomson Reuters.
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Arizona Attorney General Challenges IRS Taxation of State Refund
The disagreement between Arizona and the IRS has led to a lawsuit. Arizona’s Attorney General is fighting for the refund to stay untaxed. They say if the refund is taxed it will cost taxpayers a lot of money and the state will lose sales tax revenue too. The Attorney General believes the refund should be treated like others that were not taxed in 2022.
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