The petitioners, a married couple, received targeted economic development payments from the state of New York which the state terms "credits" and treats them as refunds for "overpayments" of NY state tax. While one credit was limited to the amount of past real property tax actually paid, the other two credits at issue were not limited to past tax paid. The credits first reduced a taxpayer's NY income tax liability with any excess being carried forward or partially refunded. The petitioners claimed that the credits they received shouldn't be taxable income because they were "overpayments" of past NY income tax and, as such, were the functional equivalent of withheld taxes, and because they didn't claim deductions for NY income tax. The IRS took the position that the credits were taxable income as cash subsidies, but the petitioners also maintained that the IRS was bound by the NY definition of the credits of the credits as "overpayments." The petitioners also argued that the credits were not taxable income because they were welfare. The court agreed with the IRS position. The court first noted that if the petitioners' definitional argument were to be upheld, then states could undermine federal tax law by redefining terms. On the "welfare" argument, the court noted that receipt of the credits were not conditioned on the petitioners showing need. Thus, the credits were not excludible under the "general welfare" exception. The court also noted that the credits were income to the petitioners irrespective of whether the credits were refunded or were carried forward. Maines v. Comr., 144 T.C. No. 8 .