A bill in the Missouri legislature would stretch out the deadline for many working-class tax filers to submit their state income tax returns.
A problem was revealed in September when the state Department of Revenue announced it was reworking the tax tables after determining it had been under collecting income taxes from individuals.
The agency said the unexpected decrease in withholding was due to a longstanding inaccurate calculation of the federal tax deduction that had previously gone undetected.
Missouri collections were also affected by the Revenue Department’s error in interpreting the Congressional tax overhaul of 2017.
The personal exemption, the set amount – $4,050 – individuals could deduct for themselves and their dependents on their tax returns was eliminated. Meanwhile, the standard deduction which is offered to those who itemize their deductions nearly doubled – to $12,000 for individuals and $24,000 for joint filers. Missouri bases its income taxes on the federal system and was impacted by those changes.
Incoming Democratic House Minority Leader Crystal Quade of Springfield has filed legislation that would extend the deadline for some Missourians to pay state income tax for the 2018 tax year following the Department’s inaccurate tax estimations.
Quade noted the agency recently conducted an analysis of 2,000 tax returns and concluded that filers who would normally receive a refund averaging $70.73 would now owe $64.99.
She said filers who previously claimed the fewest number of dependents to make sure they didn’t owe the state money when they submitted their returns would now need to do the opposite and claim the most number of dependents possible.
Representative Quade told Missourinet that she filed her bill partially because the Revenue Department hasn’t determined how many filers will be impacted by its under collection of taxes, and hasn’t calculated what they’ll owe as a result.
Her bill extends the deadline to file tax returns for filers who owe less than $200.00 from April 15th to June 15th. It also provides for a four-month interest-free plan for those who have difficulty paying the bill. Those filers would have a deadline of October 15th.
Quade said the measure would provide relief for individuals and families who are most affected by the state’s error in figuring tax withholdings. “What this does is just admit that the state made a mistake in that interpretation, and we’re giving folks a little bit of leeway in a really tough time after the holidays so that they’re not having to pay that money back immediately,” said Quade.
The Department of Revenue released a brief statement late on a Friday afternoon in September announcing it had made a mistake and was under collecting income taxes. Quade thinks the agency’s failure to focus attention on the problem will blindside many taxpayers. “It was a very quick blip in the media coverage,” Quade said. “A lot of folks may not even know that this error occurred.”
The second-term state Representative and social worker by trade says she has personal knowledge of how important small refunds can be to working families. “I do personally come from a background where I have relied on that tax money at the end of the year,” said Quade. “Growing up in a low-income family and dealing with that, a couple of hundred dollars makes a huge difference.”
The Revenue Department’s error in figuring tax tables is also being linked a current budget shortfall. State revenues are down roughly $180 million from the previous year. But because of the correction made by the department, collections are expected to grow.
The revised Consensus Revenue Estimate released last week for the remainder of the current fiscal year that ends June 30th is for growth of roughly $200 million from the previous estimate made last January.
The Missouri legislative session begins next Wednesday.