ARIZONA NEWS

State leaders push back on IRS for taxing Arizona Families Tax Rebate

Jan 26, 2024, 10:31 AM | Updated: 10:35 am

A man holding a calculator sitting next to a woman filling out tax forms...

The IRS wants taxpayers who received the Arizona Families Tax Rebate in 2023 to pay taxes on the refunds. (Pexels Photo)

(Pexels Photo)

PHOENIX — Arizona leaders from both parties are pushing the IRS to reverse its decision to treat the state’s family tax refund program as taxable income on federal returns.

With tax season fast approaching, the IRS determined earlier this month that recipients of last year’s Arizona Families Tax Rebate need to report it as part of their 2023 federal adjusted gross income.

The rebates were part of the state budget signed by Gov. Katie Hobbs in May 2023. More than 700,000 families were eligible to receive $250 per dependent under age 17 and $100 per dependent over 17, with a $750 total cap. The dependents had to be claimed on the prior year’s returns.

The Arizona Department of Revenue said taxpayers should access their 1099-MISC forms through an online portal after Jan. 31 to determine if they received the rebate and the amount.

Who is pushing IRS to reverse Arizona family tax rebate ruling?

The Arizona Families Tax Rebate is not subject to state income tax, so the amount should be subtracted from the federal adjusted gross income on state tax forms.

However, Arizona Attorney General Kris Mayes, a Democrat, and state Senate President Warren Petersen, a Republican, are pushing the IRS to make the rebates non-taxable, which would save families money and simplify the process for filers.

They each contacted IRS Commissioner Daniel Werfel this week to argue against the ruling.

“The IRS should act promptly to reverse this decision and provide clear guidance to Arizona taxpayers as tax season nears,” Mayes said in a press release Thursday in which she announced she’d sent a letter to Werfel on the matter. “If they do not, my office is prepared to examine all legal avenues to ensure these dollars stay in the pockets of Arizona taxpayers.”

Petersen also sent Werfel a letter Thursday after issuing a press release last week saying he’d been in contact with Mayes’ office, the Arizona Department of Revenue and U.S. Sen. Kyrsten Sinema’s office about the issue.

The release said that more than a dozen other states have passed similar legislation, and the IRS didn’t tax those rebates.

“It makes zero sense that the IRS is choosing to hurt Arizona families by taxing a tax rebate,” Petersen said in the release.

“I’m thankful for the help from Sen. Sinema’s office in working to get this matter front and center with the IRS and U.S. Treasury. With tax season less than two weeks away, time is of the essence.”

We want to hear from you.

Have a story idea or tip? Pass it along to the KTAR News team here.

Arizona News

Scottsdale Airport...

Danny Shapiro

1 dead, 3 injured after Mötley Crüe band member’s plane crashes at Scottsdale Airport

One person died, and 4 others were injured after a plane belonging to a Mötley Crüe band member crashed on the runway at Scottsdale Airport on Monday afternoon, according to reporting by ABC15.

3 hours ago

drug bust...

Roxanne De La Rosa

Police arrest 5 suspects in social media drug ring

Five suspects took part in a social media drug ring and were arrested for trafficking military style weapons, firearms and drugs.

3 hours ago

Brady Fire...

Danny Shapiro

Brady Fire forces evacuations for residents south of Prescott

The Brady Fire that sparked Monday afternoon forced evacuations for some residents south of Prescott, authorities said.

5 hours ago

new Surprise fire department West Valley Arizona...

Serena O'Sullivan

Surprise completes 1 new fire station, buys land for another

Surprise Fire Station 309, the new Surprise fire department at the north side of Cactus Road at Perryville Road, became operational last week.

8 hours ago

Republican state Rep. Matt Gress is questioning the legality of the lease-purchase deal that bailed...

Kevin Stone

Arizona lawmaker raises questions about legality of Isaac School District lease-purchase deal

An Arizona lawmaker is questioning the legality of the lease-purchase deal that bailed the Isaac School District out of its financial crisis last month.

10 hours ago

research funding...

Kevin Stone

Arizona joins lawsuit to stop Trump research funding cuts that could cost state millions

Arizona Attorney General Kris Mayes joined a multistate lawsuit against the Trump administration to protect medical and public health research funding.

11 hours ago

Sponsored Articles

...

Fiesta Bowl Foundation

Join us for the 52nd annual Vrbo Fiesta Bowl Parade

The 52nd annual Vrbo Fiesta Bowl Parade presented by Lerner & Rowe returns on Saturday, December 28, at 10 a.m.

...

The UPS Store

How The UPS Store is giving back to the community

PHOENIX -- As 2024 nears a close, The UPS Store is looking to give back to the Arizona community with the holiday season approaching.

...

Sanderson Ford

Sanderson Ford’s Operation Santa Claus: Spreading holiday cheer through pickleball

Phoenix, AZ – Sanderson Ford, a staple in the Arizona community, is once again gearing up for its annual Operation Santa Claus charity drive.

State leaders push back on IRS for taxing Arizona Families Tax Rebate