Arizona leaders from both political parties are urging the IRS to reverse its decision regarding the taxation of the Arizona Families Tax Rebate, a program established by the state’s budget in May 2023.
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Arizona Leaders Push Back Against Arizona Families Tax Rebate Ruling: Concerns Rise as Tax Season Approaches
The IRS recently announced that recipients of the Arizona Families Tax Rebate would need to report it as taxable income on their federal returns for 2023. This decision has sparked concerns among Arizona taxpayers as the tax season approaches.
The Arizona Families Tax Rebate, which provided $250 per dependent under age 17 and $100 per dependent over 17, with a total cap of $750, was intended to support more than 700,000 families in the state. However, the IRS’s ruling now requires recipients to include the rebate as part of their federal adjusted gross income, potentially increasing their tax burden.
Arizona Attorney General Kris Mayes and state Senate President Warren Petersen have both taken action to challenge the IRS’s decision. Mayes, a Democrat, and Petersen, a Republican, have separately reached out to IRS Commissioner Daniel Werfel, urging the agency to reconsider its stance and make the rebates non-taxable. They argue that this would not only benefit Arizona families by saving them money but also simplify the tax filing process for everyone involved.
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Arizona Leaders Threaten Legal Action Against IRS Over Arizona Families Tax Rebate
Mayes emphasized the importance of prompt action from the IRS, stating that if the decision is not reversed, her office is prepared to explore all legal options to protect Arizona taxpayers’ interests. Petersen echoed similar sentiments, criticizing the IRS for choosing to tax a tax rebate and emphasizing the urgency of resolving the matter before the upcoming tax season begins.
Several other states have implemented similar rebate programs, and the IRS did not tax those rebates. Petersen highlighted this inconsistency, stating that it makes “zero sense” for the IRS to burden Arizona families in this manner. He also expressed gratitude for the assistance from U.S. Sen. Kyrsten Sinema‘s office in raising awareness about the issue and advocating for a favorable resolution with the IRS and U.S. Treasury.
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