Missouri legislators should begin work immediately to extend payment deadlines for taxpayers unexpectedly caught in a tax withholding crunch this year.
Missouri state Rep. Crystal Quade, a Democrat from Springfield, has offered legislation that should serve as a starting point for discussion of the issue. Lawmakers should take it up as soon as they return to work in Jefferson City on Jan. 9.
The measure would address a problem first reported in September. Because of federal tax reform — and because of what the Missouri Department of Revenue quaintly calls “a longstanding inaccurate calculation” — some employers withheld less in state taxes from workers’ checks in 2018 than they needed to.
That could mean a nasty shock for taxpayers when they file their state returns this winter and spring.
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Quade’s bill would recognize the error by extending the deadline for paying 2018 Missouri taxes until June 15 for taxpayers who owe $200 or less. Other taxpayers would be allowed to pay in installments through Oct. 15.
“The goal here is to alleviate an unfair burden on Missouri citizens,” Quade told the St. Louis Post-Dispatch.
The extent of the problem isn’t completely clear and probably won’t be until Missourians begin preparing their taxes. For that reason, it isn’t known if Quade’s bill will fully and fairly address the withholding issue in Missouri.
But the legislation could be amended as needed. Lawmakers should consider the impact of the mistake carefully to make sure Missourians have adequate time to meet their tax obligations without undue stress or additional charges.
Missouri created this problem, and Missouri must fix it. Quickly.
To be clear: Quade’s measure won’t change the total taxes anyone owes. Missourians may still get tax bills higher than they expect, or their refunds may be smaller. Confusion is inevitable whenever the federal government makes major changes in the way it levies income taxes, and the state’s mistake may exacerbate the problem.
The legislation shouldn’t cost the state a great deal of money. It might disrupt the state’s cash flow in the first part of the year, but it should even out by late summer.
Of course, the overall impact of federal tax reform could cause budget problems in Missouri — and in Kansas, for that matter. That’s why plans in 2018 to return a so-called “windfall” to taxpayers merited skepticism. Better to wait for the dust to settle in both states before adjusting budgets to accommodate a different federal tax structure.
Missourians should pay what they owe in taxes. When the state errs, though, Missourians should be allowed to extend payment schedules to fit a budget. The Missouri General Assembly should make that adjustment a top priority this month.