Iowa Department of Revenue blocks Lohaus shot at refund. Ex-Iowa basketball star Brad Lohaus is remembered for, among other things, taking a ball in the face while guarding against an inbounds pass. That feeling might have come back when Mr. Lohaus was recently denied a tax refund by the Department of Revenue.
According to a newly released letter denying a protest filed by Mr. Lohaus, he didn’t get around to filing Iowa income tax returns for 2001 through 2005 until July 2010. The department of Revenue began collection action, including wage garnishment, in 2007. The returns filed in 2010 showed some overpayments, but the Department denied refunds on the grounds that the statue of limitations had expired. From the protest denial letter (my emphasis):
In their protest, taxpayers raise the following points to support their position.
1. The Department did not notify them that there was a one-year statute of limitations at the time the wage garnishment began.
2. Normal Iowa taxpayers have no way of knowing the rule of the one-year postdate matter with the Department disclosing the implication of the effects of lost payments.
3. Taxpayers filed their returns in good faith that the Department would refund any overpayments of the garnished funds to them.
4. Due to the trust the taxpayers had in the State of Iowa together with personal circumstances, taxpayers are petitioning that the Department refund overpayment of $36,379.66 to them.
Pro tip: never trust the State. Especially when the rules are on their side. From the denial letter:
Telephone conversations with Mr. Lohaus show that he was repeatedly advised to file returns. These returns were not filed with the Department until July 12, 2010.
Notification of the statute of limitations concerning Iowa income tax refunds is found in both Departmental rule 701 IAC 43.3 (8) and Iowa Code §422.73. Both the Iowa Code and the Department’s administrative rules are published and available for public review. Every citizen is presumed to know the law.
The statute on refunds in Iowa reads:
A claim for refund or credit that has not been filed with the department within three years after the return upon which a refund or credit claimed became due, or within one year after the payment of the tax upon which a refund or credit is claimed was made, whichever time is the later, shall not be allowed by the director.
The taxpayer was eligible for amounts garnished within one year of the filing, but not older payments.
The moral? File your returns, even if you have an overpayment. If you let the statute of limitations expire, they get to keep it. And they don’t have to warn you that they will.
TaxProf, IRS Releases 159-Page Proposed Regs on New ObamaCare Medicare Taxes. Just in time for me to teach them to the Iowa Bar tax school Thursday. Thanks, IRS.
Paul Neiffer, IRS Issues Proposed Regs on 3.8% Medicare Surtax
Wrong. They feel they need a distraction. Democrats Needlessly Insisting on Rate Hikes (Martin Sullivan, Tax.com)
Concern Trolling: Why the Tea Party Is Bad for Conservative Tax Policy. (Jeremy Scott, Tax.com). When you see Todd Akin listed as a Tea Party candidate (he was more a creature of the social conservative wing of the GOP, not the Tea Party wing), somebody is being lazy.
Linda Beale, Republican “fiscal cliff” proposal
Please please please: Ohio Considers Changes to Complex Municipal Tax Codes. (Julia Morriss, Tax Policy Blog) If you have to have something as stupid as a municipal income tax, at least do it like Iowa, as an add-on to the state filing.
Please no! It’s Beginning to Look a Lot Like… Tax Season (Trish McIntire)
Kay Bell, Tax moves to make in December 2012
While doing their best to prevent them: France Struggles to Tax Corporate Profits (Robert Goulder, Tax.com)
Actually, writing big checks can cause poverty, for those writing them. There’s More To Fighting Poverty Than Writing Big Checks And Claiming Tax Deductions (Janet Novack)
Robert D. Flach posted his Saturday Buzz right on time over the weekend. Catch it!
Maybe people could file forms reporting their fraud so they can measure it? IRS Tax Fraud On The Rise But Actual Size Of Problem Hard To Pin Down: Report (Huffington Post)
Muskrats exempt from service on this jury. Jury selection to begin in Beavers tax evasion trial
Tags: TaxProf, Kay Bell, Janet Novack, Robert D Flach, Linda Beale, Paul Neiffer, Martin Sullivan, Trish McIntire, Huffington Post, Anthony Nitti, Robert Goulder, Jeremy Scott, Brad Lohaus, Julia Morriss, Beavers