
                         THE VIRGINIAN-PILOT
                 Copyright (c) 1994, Landmark Communications, Inc.

DATE: FRIDAY, June 3, 1994                    TAG: 9406030018 
SECTION: FRONT                     PAGE: A16    EDITION: FINAL  
SOURCE: Medium 
DATELINE: 940603                                 LENGTH:

PROCRASTINATION ON REFUNDS LASTING TOO LONG

{LEAD} Regarding Hebert Hempel's letter (``Don't use state funds for `uncertified debt' to retirees,'' May 21): The topic of the refund of taxes collected from the annuities of retirees of the federal government has been the subject of much heated rhetoric (by both sides). A restatement of the absolute facts is needed. They are:

1. Virginia (and several other states) exempted state and municipal retirees from paying state income taxes on their annuities from the state and/or municipal governments. All other retirees were required to pay state income taxes on their annuities.

{REST} 2. The U.S. Supreme Court ruled that this practice was unconstitutional (this applied to all states) and that the practice must be discontinued. The effect of this ruling was that the states had either overtaxed (all retirees other than state and municipal), or undertaxed retiree annuities. The ruling referred remedies back to the individual states. Herein lies the present conflict.

3. The state could remedy the condition (within established statutes of limitation), either by:

a. collecting ``back income taxes'' from all state and municipal retirees for the period the condition existed; or

b. refund the illegally collected taxes to the retirees.

Mr. Hempel's use of terms such as ``retroactive refunds,'' ``blameless taxpayers'' and ``avaricious group of taxpayers'' is unfortunate. The taxes collected from non-state and municipal retirees can be viewed the same as any overpayment of taxes and therefore subject to refund. The state did collect, and did use, these taxes for many years. I believe if Mr. Hempel were overcharged for merchandise at any store, that when this overcharge was discovered, he would request a refund from the store, providing that he could provide ``proof of purchase or payment.''

It is unfortunate that the elected officials of Virginia did not have the ethical backbone to settle this matter when the U.S. Supreme Court made its original ruling. Through the procrastination of state officials, Virginia courted costs exceeding the original total refund liability.

RONALD G. TIDBALL

Chesapeake, May 21, 1994 by CNB