As counties brace for the steep impact of income tax refunds triggered by the Wynne income tax decision, data is starting to flow showing the effects of the claims being processed.
The Office of the Comptroller has shared data on these refunds as part of its response document to a legislative staff analysis.
From the Comptroller’s budget response:
Since the Court’s ruling last May, the Comptroller’s Office has seen an influx of more than 12,000 amended claims. Those amended claims cover tax years 2011 through 2014. October 15, 2015 was the final date for which a taxpayer could file an amended claim for tax year 2011. Upon the case’s settlement, a significant increase was expected for the prior years within statute as taxpayers and preparers had generally waited until the statute of limitations expiration to file a protective claim. Should tax year 2014 serve as a barometer for a post-settlement tax year (taxpayers could claim expanded credit with original return), it is reasonable to assume that the $201.6 million total estimate for back tax years remains a reasonable.
The response document also details the continuing effort to administratively manage the effects of the refunds on future quarterly income tax distributions:
In consultation with several of the most impacted subdivisions, the Comptroller’s Office is contemplating administrative policy that would create several “hard stops” for local income tax distribution purposes. In essence, we would take the amount of claims processed through February of this year and spread that across the statutory nine quarters. This would permit certainty for the local government budget process. A year from today would be another “hard stop” and that amount would be spread across the remaining five distributions; again, providing certainty to the budget process. A third “hard stop” two years from now with only one impacted quarter; however, presumably the amount covered in that period would be relatively inconsequential. We are likely to promulgate this policy by the end of this week.