From Deseret News archives:

State withholds too much due to mistake

150,000 households are to get repayment in 2009

Published: Wednesday, Jan. 23, 2008 12:37 a.m. MST
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Because of a state Tax Commission error you could have had between $5 and $120 too much withheld from your first paychecks this year by your employer and sent off to Utah state bank accounts.

All together it could be upward of $9 million of Utahns' pay that was taken from them unnecessarily by the state of Utah. And if you were over-withheld, you won't be getting your cash back for 15 months or so.

State legislative leaders were talking Tuesday about the mistake, and what if anything should be done other than just have the Tax Commission correct it as soon as possible so even more of your salary isn't improperly withheld by your employer.

"It would be so costly to fix it (through some kind of a refund), it's just better to be glad it was caught so quickly, say we're sorry the state is sitting on your $60 or $100 and go forward," said House Speaker Greg Curtis, R-Sandy.

Tax Commission spokesman Charlie Roberts says that the mistake cannot be laid at the door of Utah's new (as of Jan. 1) 5 percent flat-rate tax system. "We change the income tax withholding forms sent to employers each year. This was a calculation error in, at most, 150,000 of those forms."

And employers did nothing wrong in withholding too much of your pay check, they just followed the miscalculated Tax Commission forms.

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Still, if your employer withheld too much from your first paychecks this year, no matter how little or much that was, you won't be getting that money back any time soon.

"We will correct the mistake as soon as possible," said Roberts. But without action by the Legislature and Gov. Jon Huntsman Jr., residents won't be getting that money back until they file their 2008 state personal income tax returns April 2009. And you won't be getting interest on whatever was over-withheld, either.

"It makes little sense to spend $4 million — or whatever it would be — to fix a $9 million problem. It was an honest mistake; no one is gaining personally (in the state) from it," added Curtis.

The mistake was brought to the Tax Commission's attention last week after some individuals noticed more money was withheld from their paychecks than they figured should have been. "Some people check their pay stubs, and we're glad they do," said Roberts.

A quick check found that inaccurate forms were sent to employers affecting as many as 150,000 people who file as married, filing jointly and make more than $8,000 a year. Not all households filing married jointly were affected, he added. "At the tops it's 150,000 (households), but we don't think it will be that many," said Roberts.

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