WASHINGTON, DC - Ways and Means Oversight Subcommittee Chairman John Lewis (D-GA),today introduced H.R. 2303, the State Tax Administration Assistance Act of 2009, to assist States in the collection of delinquent income taxes. Currently, a Federal program allows States to offset Federal income tax refunds for delinquent State income taxes only if a taxpayer resides in the State seeking the offset. The bill would remove the same-State requirement and allow States to collect unpaid State income taxes from nonresidents under the program.
Due to the current economic downturn and State budget deficits, interest has grown for expansion of the Federal refund offset program. Today, the U.S. Government Accountability Office (GAO) released a report describing recent proposals to expand this program and the challenges presented by the differing proposals. The report highlights the estimated loss of revenue due to the residency requirement and notes that the Internal Revenue Service supports removing the current restriction.
“The Committee has been asked over and over again to expand the Federal refund offset program in a variety of ways," said Ways and Means Oversight Subcommittee Chairman John Lewis. “Any expansion of the program must be balanced against taxpayer privacy concerns, administrative burdens, and the effect on voluntary taxpayer compliance. In response to today’s report and the current state of the economy, I have introduced a bill that expands the refund offset program to assist States in collecting delinquent income taxes."
Currently, 40 states and the District of Columbia participate in the refund offset program. In fiscal year 2008, States collected more than $380 million in delinquent state income tax debt through the program.
