Tax time is no time for surprises. Unfortunately, many middle- and lower-income Missouri taxpayers are in for quite a shock in the coming weeks as they prepare their 2019 tax returns, after changes in tax law and mistakes made by the Missouri Department of Revenue.
Many Missourians have come to plan on their refund each year. They rely heavily on those checks to meet their budgets. This year, many will find their refund check substantially smaller, and some may even find a bill owed to the state instead.
All of this is the result of the Department of Revenue providing inaccurate withholding tables to Missouri businesses after the Trump tax changes took effect. Missourians' paychecks simply didn't withhold enough money this year to cover the taxes they now owe. To be clear: This was a preventable situation. We should have understood and communicated the impacts of the recent Republican tax changes, but DOR dropped the ball. Now our taxpayers face a major April surprise, and our state budget hangs in the balance.
The story of one state worker provides a stark illustration of the problem. Last year, this single mother received a $7,420 refund from the federal government and a $128 refund from the state. This year her federal refund will be $4,275, while she will owe the state $309.
That's an overall swing of $3,402. For this person and countless other Missourians in a similar situation, that's a lot to absorb. Whether it's catching up on car payments that are behind or paying for unexpected expenses that are outside of a typical month's budget, the fact is many Missourians base their budgets around their expected refunds. Losing $3,000 you expected would be in your pocket creates enormous challenges for many in our state.
The actual number of Missourians affected is still unknown. I and others have repeatedly requested this information, but the department claims they just don't know. A best guess is that hundreds of thousands of us will be affected. Add to this the uncertainty this generates for the state budget: Whether the Missouri Legislature can balance our budget and the state can make our annual revenue target for this year all hinges on as much as $500 million worth of these surprise tax bills.
Perhaps more concerning than the withholding problem itself is that numerous officials in Gov. Mike Parson's administration and in the Republican-controlled General Assembly appear to have known about the situation in the early fall, but kept it largely quiet for months. Being completely transparent about the situation earlier may not have prevented the tax hit that many Missourians are now experiencing, but it certainly would have eased the blow by giving us more time to prepare.
We will continue to press the department and administration for answers and demand accountability. So far, Missourians are getting too little of either.
State Rep. Crystal Quade, D-Springfield, is minority leader of the Missouri House of Representatives.