PHOENIX — More than 700,000 households in Arizona are missing money from their bank accounts, according to three of Arizona's members of Congress.
The Internal Revenue Service (IRS) taxed a state rebate in a bid to help with inflation costs, but members of Arizona's congressional delegation say residents in 21 other states who got similar rebates were not taxed. Arizona's rebates came from surplus money, while the other states' rebates were from COVID relief funds.
"But it's effectively the same thing, it doesn't matter how it's defined," said U.S. Rep. Greg Stanton, a Democrat who represents Arizona's Fourth District. "In layman's terms, Arizona taxpayers got screwed."
After Arizona Attorney General Kris Mayes sued over the taxes but had her case dismissed by a federal judge, Stanton and Republicans David Schweikert (District 1) and Juan Ciscomani (District 6) introduced a proposal to return the money taken by the IRS to Arizona taxpayers.
"Other states didn't have this full-on income tax on their citizens, why should Arizonans have to?" Schweikert said.
Stanton added: "It's simply a fairness issue. This is not a major issue, but it's a fairness issue for Arizona taxpayers."
Arizona families were expected to get up to $750 on the rebates, depending on the number of children a family had and how old they were. According to an analysis by The Arizona Republic, filers in the 22% tax bracket lost about $165 off their rebate due to the tax.
Stanton, Schweikert, and Ciscomani are now up against a deadline that only continues to tighten. Lame duck, the final few weeks before a new administration comes in, wraps up in December. After that, new members of Congress will arrive and President-elect Donald Trump is anticipated to move quickly to implement his new agenda, making for a much more difficult environment for a localized effort like the tax rebate to get the votes it needs.
"We got to try to get this move this as fast as possible before everyone heads for the exits," Schweikert said.
The effort is currently under the consideration of Speaker Mike Johnson, R-Louisiana, and has not yet received a vote.
