IRS taxing state rebates roils leaders

‘It makes zero sense.’
A sign outside the Internal Revenue Service building in Washington. (AP Photo/Patrick Semansky, File)

The Internal Revenue Service’s decision to tax some state tax rebates but not others is enraging state leaders and baffling tax policy experts who say the agency is being inconsistent.

With the Jan. 29 start to tax season only days away, Arizona Senate President Warren Petersen (R) said he is working with U.S. Sen. Kyrsten Sinema’s (D) office to find a resolution to the IRS’s recent guidance that it will tax rebates issued to 700,000 Arizonans last year. He said litigation is unlikely.

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