Among the thousands of income tax returns filed at the Utah State Tax Commission just before deadline was one made on behalf of the estimated 35,000 federal retirees who paid Utah taxes on their pensions in 1985.
The "class claim" was submitted to the Tax Commission by Ogden attorney Jack Helgesen, who has already filed suit in federal court seeking the taxes back based on a recent U.S. Supreme Court decision.In March, the Supreme Court required Michigan to refund state income taxes paid on a federal pension there and ordered a change in a law that exempted state and local employees from paying state income taxes on their benefits.
Utah officials have interpreted the ruling to mean that the state must change its practice of treating federal pensions differently than those paid to state and local employees.
The Tax Commission has said that it is up to the Legislature to decide whether to start exempting federal pensions or to begin taxing state and local retirement benefits.
Lawmakers, who may meet in special session later this year to consider the issue, must also figure out how to treat the estimated $14 million plus that has been collected annually in state taxes on federal pensions.
But the federal retirees who have paid Utah taxes on their pensions are not willing to wait for lawmakers to determine their fate. Hundreds have already filed individual amended returns for 1985.
They are seeking a refund for taxes paid in 1985, because the state statute of limitations on tax issues is three years. That meant the deadline for filing an amended return for that year was Tuesday.
For those former federal employees who were not aware of the opportunity to file the amended returns or who just didn't finish it in time, Tuesday's mass filing was intended to protect their claim to a refund.
Two officers of the Utah Federation of the National Association of Retired Federal Employees said no matter what the Legislature chooses to do, the U.S. government workers should be paid a refund for 1985 through whenever the law is changed.
"The law is clear. You don't buck the U.S. Supreme Court on a matter of discrimination," said Chauncey O. Rowe, a retired military official who handles the federation's public relations.
"We have never asked for anything other than equity in the matter of taxes," Rowe said. "We just want to be on an equal basis with state retirees. Our people are just as old."
Helgesen said he hopes the Tax Commission will not wait for the Legislature to act to begin making refunds for taxes paid on federal pensions during the years when state and local benefits were exempted.
Helgesen said interest is accumulating on the money he believes is due the federal retirees. The pending class-action lawsuit in federal court, he said, will be pursued if payment is not made within "a reasonable time."
"These are retired people who need the money," Helgesen said. "They paid it. All they're asking for is a refund."