Missouri Lawmakers Hope To Provide Relief From Unexpected Tax Bills — But Is It Necessary?
After changes to tax laws caused some surprise tax bills for Missourians, lawmakers are trying to provide some relief from interest and penalties.
But a Republican senator contends legislation isn’t necessary because the Department of Revenue can already work with taxpayers who have outstanding tax bills.
At issue are changes to federal and state tax law that caused some people who were expecting refunds to actually owe money. Lawmakers from both parties have been critical of how the state Department of Revenue has handled this situation, which culminated in Joel Walters stepping down as the agency’s director.
Rep. Dean Dohrman’s legislation would allow a month’s free interest and no penalty until the end of the year for any unexpected tax bills due this year.
“Basically, the procedure is, if you file on time and then ask DOR for a payment plan, you can get 30 days interest free,” said Dohrman, R-La Monte. “If you pay then, no extra penalty and no interest charged. If you do make payments throughout, you have until the end of the year — you will not be assessed a penalty.”
Dohrman’s bill was initially approved by the Missouri House last week. He said even though the deadline to file taxes is April 15, there are provisions in the legislation that could still help taxpayers with unexpected bills.
“If you’ve already paid your taxes, and you’ve paid a penalty because you didn’t have enough withholding, this has a refund mechanism in it,” Dohrman said. “So you can ask the Department of Revenue for a refund or credit on your tax bill for next year. The way to do it is file on time. Ask for a payment plan. And then you would qualify for [the guidelines of this bill], which would give you interest-free for a month and no penalties for the rest of the year.”
House Minority Leader Crystal Quade, D-Springfield, filed similar legislation a few months ago when news of the surprise tax bills began to break. She questioned why the GOP-controlled House was considering Dohrman’s bill now — as opposed to the beginning of session.
“If the Republicans thought this was a priority, we would have seen this bill on the House floor the very beginning of session — because we all knew this was a problem,” said Quade, adding that it may be too late in the legislative process for Dohrman’s bill to make it to Gov. Mike Parson’s desk. “So, honestly, I do fear that it is too little, too late for us to actually do this — because I don’t feel like it’s a priority for them.”
Asked about the timing of his legislation, Dohrman replied “this body works slowly.”
“And, you know, we did spend a fair amount of time trying to get some answers on exactly what’s going on,” Dohrman said. “We’re still having an inquiry on what’s happening with DOR, so that’s ongoing. Process is a little slow, but we’re going to make it right in the end.”
While Dohrman expects his bill to pass out of the House on Monday, it faces a very uncertain future in the Senate.
During a press availability last Thursday, Senate Majority Leader Caleb Rowden contended that legislation like Dohrman’s wasn’t necessary because the Department of Revenue can already work with people who have outstanding tax bills. Rowden’s comments are important, because he controls what legislation gets heard in the Senate.
“Revenue already has the ability to do it, which is part of the reason why we on this side haven’t engaged in a legislative fix — because we don’t believe there’s a need for one,” said Rowden, R-Columbia. “I had it on good authority through a couple of meetings with former Director Walters that they were planning on waiving interest. They were planning on doing things to alleviate any sort of late-payment penalties.”
A spokeswoman for the Department of Revenue said that Rowden’s statement was accurate.
Casey Millburg, the House minority counsel and budget analyst, said current law does allow for compromises on aspects of a tax bill on a case by case basis. But she added it's up to the Department of Revenue director to decide "whether or not the taxpayer gets relief, how much relief, and what form that takes (i.e. penalties or interest)."
"As you can imagine, this is a process that can take some time," Millburg said. "The critical benefits of Rep. Quade’s and Rep. Dohrman’s respective bills on this issue are that they create a statutory presumption that a broad category taxpayers are entitled to get help right now, and that the threshold for them to trigger this help is significantly lowered."
Quade said Department of Revenue officials have given her different explainations about what they could do to help taxpayers with oustanding bills in private meetings and public hearings.
“Ultimately, because we are getting conflicting information from the department, and we now know after the state auditor’s audit that they’re not following current regulation and law in what they’re supposed to be doing, I simply don’t trust them,” Quade said. “So I want to see something in statute that says they have to do this.”
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