KJZZ

The Arizona Department of Revenue sent taxpayers who qualify for the rebate a letter explaining the IRS decision.

A federal judge will soon hear arguments on whether tax-rebates made to Arizona parents with dependents last year qualify as income.

That would mean the rebates, capped at $750 for families, must be reported and the taxes paid when Arizonans file by the April 15 deadline. 

Attorneys for the state argue the rebates should be exempt as they are essentially tax refunds and benefitted the “general welfare.” 

An attorney for the IRS says there’s no evidence the rebates were based on need as they phased out for individuals who made $200,000 a year or $400,000 for married couples filing jointly.

The hearing is set for April 2. It is not clear if the judge will have a ruling before the tax filing deadline.