State auditor Nicole Galloway announced that changes made to tax withholdings in January 2019 were done unlawfully and will result in over-withholding for the majority of Missouri taxpayers during a press conference Tuesday morning.
In January, Missouri’s general revenue fund was short more than $500 million, and the revenue issue was caused by the federal tax cuts and a miscalculation of the state’s withholding tables.
“For more than six months, this administration failed to communicate with Missourians on how changes to withholdings would affect their bank account. Then, despite bipartisan calls for answers, they attempted to downplay the issues,” Galloway said. “Taxpayers deserve honesty from the administration. Instead, the Department of Revenue continues to operate in secrecy.”
Taxpayers are expected to pay an additional $134 million when they file their returns, and there will be $232 million less in tax refunds issued.
The administration did not follow the legal process for the tax changes despite state law requiring legislative and public review, Galloway said.
Department of Revenue Director Joel Walters resigned in March, and Governor Mike Parson named Ken Zellers as the acting director.
Governor Mike Parson’s office released the following statement in response to the Auditor’s report:
“Our focus has consistently been on reforming and reducing taxes for hardworking Missouri families and small businesses. We’re not interested in engaging with someone that prioritizes partisan politics and scare tactics over the long-term benefits of federal and state income tax cuts.
But, to the Auditor’s office credit, they have been consistent – consistent in fighting the implementation of common sense tax cuts every step of the way. Further, the auditor’s office press release was clearly meant to politically pander because it ignores the positive progress the department has made in processing tax refunds.
While we are aware that bureaucratic challenges exist, we are committed to working with new leadership within the Department of Revenue to ensure Missourians receive the full benefits of the historic federal and state income tax cuts that were signed into law last year.”
The full audit report can be viewed by following this link.