Guinn: IRS gives green light to his rebate plan

Kirsten Searer and Cy Ryan

Tuesday, May 31, 2005 | 11:05 a.m.

CARSON CITY -- Gov. Kenny Guinn declared on Monday that the Internal Revenue Service has given the OK to his plan that would rebate $300 million to taxpayers.

The opinion states that the vast majority of Nevadans would not pay taxes on the money they get through the rebate, Guinn said.

The few who would, he said, would pay a limited amount -- probably about 15 percent.

"We feel like that's the green light we need," he said.

But Assembly Democrats accused Guinn of misreading his own IRS opinion. They maintain that the opinion is more favorable to their own rebate plan, which would give at least $175 to each Nevadan who is 18 years or older who has a driver's license or identification card through the Department of Motor Vehicles.

"After reading the opinion from the IRS, it looks like it confirms what we've said all along -- that the registration rebate would be taxable and ours wouldn't," Assembly Speaker Richard Perkins, D-Henderson, said.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, said the IRS opinion also didn't clearly state the Democratic plan.

"This is as clear as mud," she said.

For now, most legislative leaders remain in support of giving $300 million of the more than $600 million surplus back to taxpayers. The question remains how to do it, and legislators have less than a week left before the session adjourns on June 6.

Guinn hopes to refund between $40 and $300 to Nevadans, depending on how much they paid in vehicle registration fees in 2004. He maintains that not all Nevadans should get the same rebate return. Businesses, he pointed out, got the brunt of the tax increases passed in 2003, and, therefore, should get a larger amount of the surplus.

The IRS opinion does make it clear that gifts from the state government could be taxed, but Buckley argues that the Democratic rebate is a rebate of gasoline taxes, and therefore is not a gift.

All parties do agree that people who deducted their 2004 vehicle registration tax from their federal forms would have to pay income taxes on their rebate. The state has no way of knowing how many people itemized the taxes on their federal forms.

Senate Majority Leader Bill Raggio, R-Reno, has declined to comment on whether he will support a rebate, saying he'll wait until after the budget battles have been fought.

A version of Guinn's plan, Senate Bill 519, was introduced Monday. It would create an account with $300 million. The governor, treasurer and DMV director would set up a program to distribute the money to car owners by Dec. 31.

If the owner did not cash the rebate check, it would be voided in 180 days, and any money remaining in the fund after Jan. 31, 2006, would revert to the state.

Perkins said the Democrats plan to introduce their own bill in the next few days.