ÃÛÌÒÓ°ÏñAV

The governor said this past week that the forms she ordered the agency to produce back in November "should work for all Arizonans that are filing.''

"And they should feel confident filing and having certainty that they will be OK,'' Hobbs said.

Only thing is, that directly contradicts what employees of the agency told members of the Senate Finance Committee last week. They said that a third of Arizonans — about a million tax filers — could find themselves having to file amended returns if they use the current forms.

That's because the forms that are available from the Department of Revenue conform state tax law to the changes made by Congress last year in the "Big Beautiful Bill.'' They match neither the tax cuts proposed by the governor — only pieces of the changes in federal law she has dubbed "my middle class tax cut package'' — nor the ones being pushed by the Republican majority in the legislature which hew closer to, but do not match, everything Congress enacted.

Hobbs vetoed the GOP plan the first week of the session, saying she wants a bill now that includes only her plan, which carries an annual price tag approaching $250 million.

In exchange, she is promising that if lawmakers approve that, she's willing to talk about the $440 million in tax cuts Republicans want. But Hobbs also is conditioning that on Republicans showing her how they will pay for it.

Republicans insist there's enough money in an $18.7 billion budget to provide the relief.

Anyway, they note, the governor's budget itself is not exactly on solid ground, built in part on the federal government paying Arizona $760 million in reimbursements for border security costs during the Biden administration.

But with no movement on either side, that has left Arizonans wondering what happens if they file their 2025 tax returns now — what the governor advised on Thursday.

Sen. J.D. Mesnard said following the governor's counsel means that many Arizonans will have to file amended returns once a deal is reached. And that's precisely what Department of Revenue workers told the Senate Finance Committee, which the Chandler Republican chairs.

With no deal in sight, GOP lawmakers are now raising the stakes.

They have scheduled a vote Wednesday on legislation that they say would bring Arizona law into exact conformity with what Congress approved — and into exact conformity with the tax forms now available.

It's not the plan anyone seems to want. For example, it contains things like allowing people who buy new U.S.-built cars and trucks to deduct the interest payments they are making, something in the governor's plan.

It also includes a $6,000 deduction for seniors.

Hobbs wants that. But the GOP plan allows a $6,000 deduction only for payments from pension funds and retirement accounts, something the governor says favors those who can afford to have such plans and don't have to work beyond 65.

Conversely, simply adopting what Congress approved without offsets in state law would mean additional tax breaks for businesses to more quickly write off the cost of buying new equipment, provisions Republicans want but the governor does not.

And doing that also would mean providing big tax cuts for Arizonans with high state and local income taxes, something neither side wants.

But what HB 2785 would do is provide some finality and allow Arizonans to use the already prepared state tax forms -- and use them without the fear of having to file an amended return, whether doing it themselves or paying a tax preparer.

"This is definitely not our preferred approach,'' Mesnard said. But he and other Republicans say it's the only way to clear the path to let people start preparing their returns to be ready to file before the April 15 deadline.

That's just 72 days away.

"Doing nothing would only guarantee more confusion and force families and businesses to fix the government's mistakes later,'' Mesnard said. And he said it would be "completely unjust'' to tell taxpayers to file now and hope that they won't have to refile later.

That bill won't even get the governor's consideration because it has "tax cuts for special interests and billionaires'' with no plan from Republicans on how they're going to pay for them,'' said Christian Slater, gubernatorial press aide.

A veto, though, still would leave Arizona with those tax forms that her own Department of Revenue says could leave a third of Arizonans in the position of wondering if they're going to have to prepare their taxes twice. And those are the forms that Hobbs said just last Thursday that all Arizonans "should feel confident filing and having certainty that they will be OK.''

But what of the testimony that state tax officials provided last week to legislators in a public meeting?

"I will continue to work to clarify what the Department of Revenue is saying,'' the governor said. But she balked when asked what the agency is saying that she believes is wrong.

"I don't want to litigate the details,'' Hobbs responded. "I just think there was a miscommunication there.''

On Friday, the agency issued a revised advisory. But despite the governor's comments, it still says that, based on its calculations, a third of taxpayers still could have to file amended returns depending on a final deal.

That new advisory tells taxpayers they are "unlikely'' to need to file an amended return — but only if they take the standard deduction and don't plan to claim other deductions that conform with federal law, like those for tipped income, overtime compensation, that $6,000 senior deduction and writing off interest on purchase of a qualified new car.

And as to whether taxpayers should file now or wait, the department calls that "a personal decision'' depending on how soon they want their refund and "their comfort level with potentially filing an amended return later.''