Lawmakers consider fixes for costly tax miscalculation

    Missouri lawmakers are still probing what led to a miscalculation that will lead to lower tax refunds for many Missourians. (File)

    High-ranking state lawmakers on Wednesday said they're still trying to figure out how much the average taxpayer will pay due to a mistake at the Department of Revenue.

    Department officials late last year announced they discovered they had miscalculated Missourians' tax withholds. As a result, taxpayers who normally would receive a refund this year will either receive a smaller refund or might owe the state money.

    House Minority Leader Crystal Quade, D-Springfield, said she has filed two bills meant to help taxpayers who find themselves facing lower-than-expected refunds or higher-than-expected tax liabilities. One measure would require the Department of Revenue to set up a program that would allow anyone with a tax liability of $200 or less to pay as late as Oct. 15. The other would protect anyone enrolled in the aforementioned plan from having to pay any penalties for late filing. Both bills would apply only to taxes assessed for 2018. Quade said many families factor tax refunds into their budgets and the accounting error will leave them scrambling to make up the difference.

    "We have a lot of folks who rely on these tax returns to catch up on utility bills, to pay rent, to buy prescription drugs that are no longer covered," she said.

    Revenue officials early this week provided estimations to a House committee investigating the error. For example, a married couple with two children and an annual income of $60,000 and who did not claim any allowances on their federal or state W-4 tax forms might have received a refund of $219 last year but this year instead might have to pay $224. Some people face an even bigger change. Quade said she has spoken with a single mother who works at the Capitol and will lose a couple thousand dollars in tax refunds this year.

    Committee chair Rep. Robert Ross, R-Yukon, said the impact to each taxpayer will differ because so many factors influence your tax returns. Ross said the department's leadership has not been forthcoming with his committee. He said the agency's reticence has made it difficult to gauge the exact impact to Missouri taxpayers.

    "If they had properly communicated this in August, when it was brought to their attention, taxpayers at that point could have made an adjustment," he said. "They could have braced for whatever impact."

    Ross said in his view, the delay in alerting taxpayers causes even more problems than the miscalculation itself. He said taxpayers might be able to adjust their withholdings on their W-4s for future tax years, but it's already too late to do anything about their 2018 taxes.

    "They should explain that to taxpayers. However, thus far, they have failed in doing that, and that's one of the big frustrations that I've had," he said.

    Ross said before lawmakers start working on legislative fixes, they first need to determine exactly what went wrong and what the department can do on its own. He said that will depend on ongoing conversations with the Department of Revenue's leadership.

    The Department of Revenue did not return a call seeking comment for this story.

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