Details of plan for tax rebate debated

Kirsten Searer

Wednesday, May 25, 2005 | 11:08 a.m.

CARSON CITY -- Even after receiving legal opinions, Assembly Democrats and Gov. Kenny Guinn's office are still at odds on how to rebate $300 million to taxpayers this year.

At issue is what kind of rebate would be taxed, and whether the state would have to issue 1099 tax forms to people who receive the rebate.

Assembly Democrats have attacked Guinn's plan to refund vehicle registration fees, saying residents might be heavily taxed because some people deduct the fees from their federal income taxes. They also cite an opinion from the Legislative Counsel Bureau issued last week that rules the state would likely have to issue 1099 forms to people who get back their vehicle registration fees.

But Guinn's office spent more than an hour on the phone with representatives of the Internal Revenue Service on Tuesday, and spokesman Greg Bortolin said the state might not have to issue the forms under Guinn's plan.

Guinn's office is still working with the IRS to figure out a rebate plan that would give Nevadans the most bang for their buck, he said.

Guinn's plan would give anywhere from $40 to $300 to residents, depending on how much they pay to register their car. Guinn has said he hopes to stick to his rebate plan because businesses that pay more to register many cars would get more money back.

"It wasn't discouraging," Bortolin said. "We're not changing our course. We're going to land on the plan that is the most efficient from the DMV's perspective and also try to land on the plan that gets the most amount of money in the most people's hands."

Assembly Democrats are sticking by their plan to refund at least $175 to each Nevadan 18 years or older with a driver's license or identification card from the DMV.

While the opinion from the Legislative Council Bureau said a vehicle registration fee rebate likely would have to be taxed, it found that a rebate of a tax deducted less often on federal income tax forms -- such as the gasoline tax -- would not be taxed.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, said Democrats plan to introduce a bill in the next few days that would officially rebate gas tax money, though the funds would technically come from the general fund surplus.

The plan, she said, is the best way to ensure that "every penny lands in the pockets of Nevadans."

"This has been shown to be the most solid way to do that," she said.

Bortolin said Guinn's office will ask the state Senate to introduce a bill outlining his plan once it is ready. He said that shouldn't be a problem.