By Howard Fischer | Capitol Media Services
Key Points:
- Arizona filed a lawsuit to recover $20 million taken from Arizona taxpayers by the IRS
- State lawyers say the IRS improperly taxed one-time rebate checks from 2023
- 21 other states who passed similar rebates were not taxed
State lawyers are asking a federal appellate court to allow them the opportunity to recover more than $20 million they claim was illegally taken from approximately 750,000 Arizona taxpayers.
In legal briefs, members of the Attorney General’s Office contend that U.S. District Court Judge Murray Snow erred in upholding the Internal Revenue Service’s decision that $260 million in one-time rebates in 2023 were subject to federal taxes.
Murray did not dispute that the IRS reached a contrary decision regarding the one-time payments to residents in 21 other states. But he said what Arizona did was factually different — including the fact that the “rebates” in some cases exceeded the amount of state taxes that some residents paid.
