Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 8, 1991 TAG: 9103080529
SECTION: VIRGINIA PAGE: A-4 EDITION: METRO
SOURCE: BILL BYRD LANDMARK NEWS SERVICE
DATELINE: RICHMOND LENGTH: Medium
Under pressure from General Assembly tax writers, the state tax department is mounting a campaign to publicize the error and showing how taxpayers should compensate for it.
The problem stemmed from a misinterpretation of a tax reform bill passed by the legislature in March 1990, officials said.
More than 3 million incorrect forms were printed and distributed, at a cost of about $1 million, and officials said it is too late and too expensive to replace them.
State tax returns are due May 1; thousands already have been filed, and local commissioners of revenue say many elderly Virginians have overpaid.
The mistake shortchanges taxpayers aged 62-64 who have federal adjusted gross incomes of less than $6,000 and those 65 and older with incomes of less than $12,000.
In writing the tax forms, state officials improperly limited the income subtraction due those taxpayers. Legislators insist that all taxpayers 62 through 64 can claim the $6,000 subtraction - minus Social Security or Railroad Retirement benefits. Those 65 or older can claim a $12,000 subtraction, again minus Social Security or Railroad Retirement.
As printed, the tax form limits the subtraction to the amount of the taxpayer's federal adjusted gross income.
"It was a bureaucratic misinterpretation of legislative intent," said Del. Howard Copeland, D-Norfolk, a member of the House Finance Committee.
Copeland said legislators early this year began receiving "a lot of calls from elderly citizens filling out their tax forms" who felt they were being shortchanged. After analyzing the forms, legislators agreed that a mistake had been made, Copeland said.
The House Finance Committee brought the issue to a head Feb. 23, the last day of the legislative session. Senior members, including Chairman Richard Cranwell, D-Vinton, insisted that the forms were incorrectly drawn and demanded they be corrected.
State Tax Commissioner William Forst accepted the committee's view and agreed to issue new regulations overruling the 1990 forms. Within days, the department distributed a bulletin to tax specialists, agencies for the aging and local revenue officials.
Still, officials acknowledged Thursday, many elderly taxpayers have shortchanged themselves.
State officials said they would be able to correct at least some of the mistakes without asking the taxpayers to file more paperwork.
Meyers said many older taxpayers apparently decided that they were eligible for no subtraction and failed to fill out that portion of the form. In those cases, the taxpayers must file amended returns to recoup their overpayments. The amended returns should be marked "recomputed age subtraction" at the top of the forms.
by CNB