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May 27, 2005
Nevada's tax rebate debate continues in Carson City
By BRENDAN RILEY Guinn said he was expecting a letter from the IRS on whether Nevadans would have to pay taxes on the rebates, but had been told verbally by the IRS there appear to be no tax consequences for rebate plans that spend down surplus state general fund dollars. "Generally speaking, any of these will work," Guinn said in an interview. However, he said the IRS questioned why the Assembly Democrats would describe their latest proposal as a gasoline tax rebate when the real source is the general fund, which has surplus funds from a wide variety of tax sources. Later Tuesday, following a long phone conversation between the IRS and Guinn's office, Guinn spokesman Greg Bortolin said there may be some tax liability for individuals who include their vehicle registration fees among their tax deductions. Also, he said rebates of $600 or more could trigger some tax consequences. There's agreement on rebates totaling about $300 million, although Guinn's plan would provide rebates of vehicle registration fees. That plan would help any vehicle owners - but give more of a break to businesses or others with large numbers of cars or trucks. The latest plan from Assembly Democrats is described as a fuel tax rebate, but it would be based on a list of any adult with a valid Nevada driver's license or identification card as of Jan. 1. The plan is similar to an earlier proposal from Senate Minority Leader Dina Titus, D-Las Vegas, to give everyone 18 or older with a license or ID card as of May 1 a check for $150. The Assembly Democrats' plan would provide $25 to $50 more. Guinn said he still favors his plan, but it's not just pride of authorship. He said it helps businesses that were hit by the $833 million tax increase passed by the 2003 Legislature, in addition to helping individuals who didn't face higher sales taxes or other levies. "I don't have pride of authorship," Guinn added. "My pride of authorship comes right down to $300 million. That's my number." Assembly Majority Leader Barbara Buckley, D-Las Vegas, said the fuel tax rebate still appears to be the best way to go. She added the Legislature's legal advisers provided her and Assembly Speaker Richard Perkins, D-Henderson, with an opinion stating the plan would result in no federal tax consequences. "To us, this makes more sense, because why should a penny of this go to the IRS?" she said. The opinion, dated May 16, states that a rebate or refund of fuel taxes wouldn't be considered gross income subject to federal taxes, and the state wouldn't be burdened with having to issue federal 1099 forms to recipients or to file reports to the IRS. However, the opinion states that people who itemize deductions would have to declare the Guinn plan for a vehicle registration fee rebate as income. |
