Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, April 5, 1995 TAG: 9504050066
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: JACK DORSEY LANDMARK NEWS SERVICE
DATELINE: LENGTH: Medium
But no, Virginia, not everyone is happy.
And not even a finely tuned calculator will solve the issue very quickly.
Dozens of the 150,000 illegally taxed retirees began telephoning the state Department of Taxation on Monday saying the checks they received over the weekend were about half what they expected.
The state says they failed to read the fine print.
Virginia was one of several states that taxed federal retirement benefits while exempting the benefits paid to state employees - a practice ruled unconstitutional by the U.S. Supreme Court in 1989.
More than 90 percent of Virginia's federal retirees accepted the state's offer to settle the ongoing litigation for about 77 percent of the amount owed.
They will share $60.34 million in payouts this year, with subsequent payments scheduled each March 31 through 1999.
Marilyn Moranha of Virginia Beach, whose husband, John, retired from the Marine Corps after 32 years of service, expected one-fifth of their $3,815 settlement - $763. Instead, they got $411 in the first payment this week.
She wants to know why she isn't being paid in equal installments over the next five years.
``I'd like to see that money growing in my account, not the Department of Taxation's,'' she said. ``I think the state should pay what people are expecting, not to short-change people. We're hot. We're almost afraid to cash the check, thinking that means we agree to this.''
Dianne Lee, of the Taxation Department in Richmond, said the payments never were intended to be in equal amounts.
``Every year, there is a certain amount of money appropriated to pay out the settlements,'' she said. ``Fifty percent of that money goes to settle the lowest claims.''
For this year, the total allocation - by the state General Assembly - was $60.34 million. So $30.17 million went to settle in full the smallest claims - those owed $1,148.95 or less. That amounted to 54,267 retirees, more than 36 percent of those who settled.
These are not the folks who are complaining. It's the remaining group - about 100,000 people. They are receiving approximately 10.8 percent of their settlement this month, because that's all that's left this year.
Again next year, 50 percent of the allocation will be used to pay off those with the lowest remaining claims. The rest will be divided as annual installments among those people who remain.
Calvin Knotts of Daleville said he was not surprised to hear that retirees got less than they expected. It is exactly why he refused to take the settlement and, instead, gamble on getting a 100 percent refund, plus interest, as a plaintiff in a class-action lawsuit against the state.
Knotts said it was clear to him from the forms retirees were asked to file for settlement that any agreement would not pay him the settlement amount in one year.
``I felt like to string it out over a four-year period was unfair,'' said Knotts, a former bank examiner with the U.S. Treasury Department.
``All of this information went out to the retirees,'' Lee said. ``Whether they read it or not, I can't say. Obviously a lot of them did not, because we are getting a tremendous number of phone calls here as well.''
State officials plan to mail postcards to the retirees this week to further explain the process.
Estimating exactly what will be sent to individuals is not easy.
``You can't necessarily figure when you will be paid off totally, because we don't yet know the exact number of smallest claims for next year,'' Lee said.
In addition, there's the question of how much the General Assembly will appropriate each year.
Lee believes a number of people did not look at the 76.5459 percent settlement agreement and may have made their calculations based on 100 percent of the taxes paid.
``We are really trying our best to make it easy for them to understand what the process is,'' Lee said. ``Obviously, there are some confused people about the process.''
Staff writer Lisa K. Garcia contributed information to this story.
by CNB