Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, June 8, 1995 TAG: 9506080083
SECTION: VIRGINIA PAGE: C-3 EDITION: METRO
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
Michael Kator, a Washington, D.C., attorney representing 14,258 federal pensioners who rejected a settlement Virginia reached with 147,506 retirees, argued that his clients are entitled to full refunds.
Pensioners who accepted the deal will receive refunds amounting to 76 cents on every dollar they were taxed illegally.
``It was their money, their property,'' Kator said. ``There is no reason why the tax commissioner can continue to hold onto it.''
But Gregory Lucyk, a senior assistant state attorney general, said Virginia provided a mechanism for retirees to challenge the taxes before they were paid, so the law does not require refunds.
Virginia was one of 23 states that taxed federal pensions but did not tax all or part of state or local retirees' pay - a practice the U.S. Supreme Court declared unconstitutional in a Michigan case in 1989.
``Every other state has repaid the taxes,'' Kator said. ``There is no reason to continue this war of attrition.''
The General Assembly changed Virginia's law immediately after the U.S. Supreme Court ruling, but federal retiree Henry Harper filed a lawsuit on behalf of more than 160,000 pensioners seeking refunds.
Legislators last year approved a $351 million settlement, for which the first checks were mailed March 31. When more than 14,000 retirees opted to continue their court fight and another 348 said the state could keep the taxes they paid, the settlement's cost dropped to $306 million.
The U.S. Supreme Court ordered refunds in a similar case in Georgia last year, after Virginia had worked out the settlement with its retirees.
Kator said after Wednesday's hearing that those still involved in the Virginia suit are seeking refunds totaling about $50 million.
by CNB