State officials say Vermont’s disappointing April revenue report could be related to a failure among some software companies to take changes in state law into account.
The issue means some taxpayers owe additional money.
Lawmakers changed two deduction policies when assembling the revenue package during the 2015 session. One change eliminated a deduction Vermonters could get for their state and local taxes. The other put a cap on itemized deductions at 2.5 times the standard deduction.
Tax Commissioner Mary Peterson said some tax preparation software may not have been updated to reflect those changes.
A monthly revenue report released last week showed that personal income tax returns came in $18 million below projections for April — an important month for state finances because of the income tax filing deadline.
Peterson said the department is still researching the extent of the issue.
The state knows that at least $1.5 million was not collected that should have been because of the failure to take the elimination of the state and local tax deduction into account, Peterson said.
On average, people who took a deduction for state and local taxes will owe about $160, she said.
Meanwhile, department employees “really haven’t been able to quantify” the extent of the issue related to the cap on deductions yet, she said.
The two policy changes apply only to people who itemize their deductions, roughly a third of all Vermont filers, according to Peterson.
Peterson said the state is aware that Intuit, the company that owns financial management software including QuickBooks and TurboTax, has sent a letter to some customers notifying them of the issue.
For the full article please visit: http://vtdigger.org/2016/05/09/taxpayer-software-glitch-blamed-in-april-revenue-slump/
Note to Davis & Hodgdon clients: Please be assurred that software used during the processing of your tax return does NOT have this issue.
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