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AG Mayes Joins Republicans In Fighting IRS In Family Tax Rebate Battle

February 1, 2024

By Daniel Stefanski |

Arizona’s Attorney General is standing with the state’s Senate President to protect the financial interests of families.

Last week, Attorney General Kris Mayes sent a letter to the IRS Commissioner, requesting the agency “reconsider its decision to tax the 2023 Arizona Families Tax Rebate.”

In a statement that accompanied her announcement, Mayes said, “The IRS should act promptly to reverse this decision and provide clear guidance to Arizona taxpayers as tax season nears. If they do not, my office is prepared to examine all legal avenues to ensure these dollars stay in the pockets of Arizona taxpayers.”

The news from the state Attorney General’s Office follows communication from Arizona Senate President Warren Petersen over this matter. Earlier this month, Petersen issued a press release to share that he was “working diligently to come to a resolution that will protect the more than 700,000 recipients from having to give the federal government a portion of [the rebate] this tax season.”

Petersen also thanked Mayes’ office for “reaching out to us on this matter,” though he cautioned that “litigation likely isn’t the best approach.”

In her letter to the IRS Commissioner, Mayes argued that “the full Tax Rebate should be excludable from federal tax under the general welfare exclusion,” and that “at a minimum, the Tax Rebate should be excluded from federal tax to the extent it does not exceed state taxes that were actually paid and that were not deducted from federal income.”

The state’s top cop pointed to past IRS guidance and states where the agency “determined to be excludable from federal tax in February 2023,” such as Alaska, California, Colorado, Delaware, Idaho, and Indiana. She added that different guidance from the IRS established other exclusions that benefited four states – Georgia, Massachusetts, South Carolina, and Virginia. In closing, Mayes wrote that “it would…be fundamentally arbitrary and inequitable to preclude Arizona and its taxpayers from relying on that guidance, particularly given the materially similar (and less restrictive) state programs that the IRS found to be nontaxable in whole or in part last year.”

Mayes asked for the IRS to reply to her letter “by return letter or through amended published guidance no later than February 6.”

Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.

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