OKLAHOMA CITY (AP) - State income taxes will not have to be paid on pending federal income tax rebates, a spokeswoman for the Oklahoma Tax Commission said Monday.
However, Oklahomans who owe back taxes or money to the government for such things as delinquent student loans and child support payments will have their rebate checks wiped out or reduced.
Paula Ross, Tax Commission spokeswoman, said the rebates are not being considered as income at the federal level, so they also will not be taxed at the state level.
'But people who owe the state or federal government may have the rebates snagged' just as regular tax refunds are captured, she said.
The rebates are part of an economic stimulus package scheduled to be signed into law by President Bush on Wednesday.
Most single taxpayers will get $600 rebates and most married taxpayers will get $1,200, plus $300 per child. Officials hope taxpayers will spend most of their money on goods and services to spur the national economy.
Oklahoma legislators had taken steps to ensure state taxpayers would not be penalized on their state income taxes because of the rebates.
Senate President Pro Tem Mike Morgan, R-Stillwater; Co-President Pro Tem Glenn Coffee, R-Oklahoma City, and House Speaker Chris Benge earlier said they supported legislation to deem the federal rebates as nontaxable on the state level.
Morgan said the idea of the stimulus package is to have taxpayers 'take that money and spend it on main streets across the country, including right here in Oklahoma.
'I am certainly in favor of ensuring Oklahomans do not have to pay state income taxes on those rebate checks. Those rebate checks are intended to pump money into our economy and not back into the state coffers.'
Rep. Randy Terrill, R-Moore, chairman of the House Revenue and Taxation Committee, said concern that the tax rebates may be taxed by the state was probably due to a situation that developed when federal taxes had to be paid on state tax rebates a few years ago.
'Generally, federal tax rebates are not taxed at the state level,' Terrill said.
Sen. Don Barrington, R-Lawton, had prepared an amendment to ensure the federal tax money was not taxed, just in case. The amendment was planned for his bill expanding the fall sales tax holiday to include school supplies.
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