PHOENIX — Arizona Attorney General Kris Mayes announced Wednesday her office is suing the Internal Revenue Service for attempting to tax a one-time rebate given to local residents.
Last year, Arizona lawmakers added a child tax rebate into the state budget that paid up to $750 for eligible taxpayers in the Grand Canyon State.
VERSIÓN EN ESPAÑOL: Kris Mayes, Fiscal General de Arizona demanda al IRS por gravar el reembolso que fue otorgado a residentes del estado.
But the IRS later told the state that the rebate would be classified as taxable income for the estimated 740,000 families who received it.
Lawmakers said the decision didn't "make sense" and now Arizona's top legal official is asking the courts to declare the IRS' determination as "unlawful."
Mayes said her office had attempted to get the IRS to reverse its decision before proceeding with filing the lawsuit in federal court.
"This lawsuit is about standing up for Arizona taxpayers," Mayes said in a statement. "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. "
The lawsuit is asking the courts to force the IRS to refund any rebate money that's already been "unlawfully collected."
"There was no reasoned basis to deprive Arizona and its taxpayers of consistent and equitable treatment, particularly given that the Arizona Tax Rebate— unlike other approved programs—was available only to taxpayers with dependents who met the income requirement to claim a Dependent Tax Credit," the lawsuit states.
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