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Arizona congressmen call on IRS to not tax state rebate

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(The Center Square) – The chorus of voices in opposition to the Internal Revenue Service’s taxation of a state rebate many Arizona families received last year continues to grow.

On Wednesday, U.S. Reps. David Schweikert, Greg Stanton and Juan Ciscomani asked the IRS to change course on taxing the “Arizona Families Tax Rebate.” Taxpayers in Arizona have already begun to file with the federal deadline being April 15, and 1099-MISC forms were sent out for the rebate.

“We urge the IRS to reconsider its determination and provide expedited relief to compliant Arizonan taxpayers who have already filed their 2023 tax returns,” the lawmakers stated in a letter to IRS Commissioner Daniel Werfel.

In the letter, they also said the decision-making from the federal government was poorly justified.

“In December 2023, the IRS relayed its decision orally through a video meeting, providing no written explanation until February 15, 2024, eighteen days after the start of tax season, and only in response to a letter from the Arizona Attorney General challenging the decision,” the letter states.

The Center Square previously reported that roughly 700,000 families in Arizona got a rebate of up to $750 or $1,500 for married joint filers, based on number of dependents they have, and the dependent’s ages. As a result, the IRS is taxing it as miscellaneous income.

In February, Attorney General Kris Mayes announced that her office is suing the IRS calling it “unlawful taxation” and “arbitrary and discriminatory.”

“This lawsuit is about standing up for Arizona taxpayers,” Mayes said in a statement at the time. “The federal government’s decision to tax these rebates is unfair and unlawful – and I will do everything I can to ensure the tax relief provided to Arizonans by their state government remains in the pockets of Arizona taxpayers, as intended.”

As for the congressmen, the bipartisan trio estimates in their letter $20.8 million more as a result of taxing the rebate. Arizonans do not have to pay state taxes on it, according to the state’s Department of Revenue website.

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