Ninth Circuit Gives Green Light to Arizona Challenge to Federal Tax Mandate (2022) – Ballotpedia News

A three-judge panel of the United States Court of Appeals for the Ninth Circuit on May 19, 2022, ruled 3-0 that Arizona Attorney General Mark Brnovich (R) has standing to challenge the constitutionality of the federal tax mandate under the American Rescue Plan Act.

Brnovich filed a lawsuit against the U.S. Treasury Department in March 2021, arguing that the tax mandate is unconstitutional because it penalizes a state if it uses federal COVID-19 relief funding to subsidize a tax cut. Outlined in the American Rescue Plan Act, states are not permitted to use COVID-19 relief funds to offset reduced net tax revenue. States can use the funds to respond to the public health emergency, to help households, small businesses and nonprofits, and to help affected industries such as tourism, travel and hospitality.

The United States District Court for the District found that Arizona lacked standing to sue and dismissed the case for lack of jurisdiction. Brnovich appealed to the Ninth Circuit, which returned the case to the district court, finding that Arizona “had standing to challenge ARPA both because there was a realistic danger of enforcement of ARPA and because there was a justiciable challenge to the sovereignty of the state, which alleges an infringement of its power to set tax policy and its interest in freedom from coercion affecting its tax policy.

Attorney General Brnovich argued that the fiscal mandate threatens state sovereignty. “The federal government has no right to tell the states how to set their tax rates. Yet the Biden administration is trying to bully and punish states with the loss of COVID-19 relief funding if they don’t comply with these unconstitutional demands,” Brnovich said.

The U.S. Treasury Department had yet to comment on the decision as of June 8, 2022.

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