State to State Reciprocal Refund Offset - Tax Admin

[Pages:11]Serving the Citizens of the District of Columbia

State to State Reciprocal Refund Offsets

Stephen M. Cordi

Deputy Chief Financial Officer DC Office of Tax and Revenue

June 11, 2014

Introduction

? The object of a state to state reciprocal refund offset program is to offset one another's individual income tax refunds for our income tax debts

? Right now these are bilateral state to state programs

? Not unlike the TOPS and SITLP refund offset programs we have with the IRS

? Key difference ? state programs are NOT limited to residents ? you can collect from nonresidents

Office of Tax and Revenue

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DE/MD Offset - 1

? That's what inspired former DE revenue commissioner Bill Remington to conceive the idea in 1997

? DE and MD adopted the necessary legislation in 1998 and began offsetting for each other in 1999

? DE and MD agreed from the outset that success depended upon keeping the program simple ? notices, file layouts, etc.

Office of Tax and Revenue

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DE/MD Offset - 2

? Results were good but hardly spectacular ? By the time I retired at the end of 2005, MD

had recovered some $2 million from 8,000 offsets & DE had recovered $1.2 million from 4,500 offsets ? That's not the whole story

Half the offsets paid off the liabilities in their entirety Many taxpayers paid the remaining balance due

Office of Tax and Revenue

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Other State Offsets

? MD ultimately had agreements with CT, NY and NJ

? While I was in MD, I was always a little leery of DC ? the accuracy of the A/R seemed doubtful

? I did talk then DC revenue commissioner Phil Brand into getting authorizing legislation enacted by the DC Council, but he left before anything else could be done

Office of Tax and Revenue

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MD/DC Reciprocal Offset

? When I came to DC in 2008, I discovered that my earlier fears about the accuracy of its receivables were not entirely unfounded

? By 2011, DC's receivables had improved to the point that I approached Deputy Comptroller Linda Tanton about commencing a reciprocal refund offset program

? The MD/DC program kicked off in 2012 and here the results HAVE been outstanding

Office of Tax and Revenue

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MD/DC Reciprocal Offset -2

? DC Results

? MD Results

TAX YEAR

2011

2012

2013*

TOTAL

NUMBER AMOUNT

1,735 2,845 2,074 6,654

$1,287,537 $1,761,169 $1,806,884 $4,855,590

TAX YEAR

2011

NUMBER

2,015

AMOUNT

$1,504,257

2012

2,100

$1,534,325

2013*

3,038

$1,670,047

TOTAL

6,921

$4,708,629

Office of Tax and Revenue

* January through May

Other DC Reciprocal Offsets

? DC has entered into a Memorandum of Understanding with IL with the support of Director Brian Hamer

? IT work is going on right now. Our present target is to have it operational in time for this year's extension filers

? DC is very much interested in additional partners for state to state offsets. Please feel free to contact me directly if your state is interested

? DC's a good partner for this, not only because folks are constantly moving back and forth between your state and DC but also because we are a high refund jurisdiction ? we have a 40% EITC match and overwithhold by statute

Office of Tax and Revenue

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