STATE SAYS REGION WILL GET TAX REFUNDS PROMPTLY

Taxpayers in Cape Girardeau and Southeast Missouri will be near the front of the pack when it comes to receiving refunds under the Hancock Amendment.

The Missouri Department of Revenue will begin mailing refunds in February, and taxpayers in this region can expect to begin receiving their checks within a few weeks.

"You guys are on the front end," said Revenue Department spokeswoman Kay Dinolfo.

Mark Ward, the state's budget director, said the $376 million in refunds include interest earned by the state.

Under the Hancock Amendment, when total state revenues in any given year exceed personal income by 1 percent or more, the state is required to distribute the excess money to those who paid income tax during that year.

In 1995, the lid was exceeded by $147 million. In 1996, revenues exceeded the lid by $229 million.

Ward said those revenue amounts include interest income. But he said he hasn't calculated how much of the $376 million in refunds come from interest earned.

Ward said one reason the state has exceeded the revenue lid in recent years is that interest income has increased.

Court challenges delayed the refund process. Late last year the Missouri Supreme Court ruled that the state could begin making refunds.

A recent lawsuit filed by conservationists seeks to prevent the use of conservation money for refunds. But the lawsuit hasn't held up the refund process, state officials said.

The Revenue Department expects to mail 2.4 million refund checks. About 250,000 to 300,000 checks will be mailed each week, Dinolfo said.

The entire process could take 10 weeks, she said. All the checks should be mailed by April. The checks will be mailed by ZIP code. St. Louis area ZIP codes will be first, beginning with 630.

Taxpayers in the Springfield and Joplin areas will be among the last Missourians to receive the refunds, Dinolfo said.

Illinois residents who paid Missouri income taxes will receive refunds too, but they and other out-of-state residents will get their checks last.

Refunds for individual taxpayers will average $101. But Dinolfo said that many taxpayers won't receive that big a check.

Each check will show the distribution being received for the tax year 1995 and the tax year 1996.

Taxpayers can expect another refund in the fall. This distribution will cover the 1997 tax year, when revenues exceeded the Hancock Amendment's constitutional lid by $319 million.

Dinolfo said any taxpayers who have moved since filing an income tax return with the state last year should provide the Revenue Department with their new address.

While the checks are generally referred to as refunds, they are technically distributions, Dinolfo said. As a result, those who itemized and deducted their state taxes on their federal returns will owe federal income tax on 43 percent of their refund. That is the percentage of the $376 million generated by state income taxes. The rest of the money came from sales taxes and other licenses and fees.

If the state had termed it a refund, 100 percent of it could have been subject to federal income tax under IRS rules.

Dinolfo said the Missouri Department of Revenue will provide taxpayers with a form, 1099-G, that will show the amount that is federally taxable.

Taxpayers will have to report the taxable amount next year when they file their 1998 federal tax returns, she said.

TAX REFUND FACTS

Individuals and corporations filing 1995 and 1996 Missouri Income tax returns are eligible for the refunds under the Hancock Amendment. If you live in another state, but work in missouri, you also qualify for the refund. A total of $376 million will be refunded to taxpayers.

The Department of Revenue expects to mail 2.4 million refund checks. The refunds will be mailed beginning next month. It is expected to take 10 weeks to mail out all the checks. The checks will be mailed in ZIP code order, from low numbers to high, beginning with 630 prefixes.

Your refund amounts to approximately 5 percent of what you owed in Missouri income taxes in 1995 and 1996. You can find that tax figure on line 36T on the 1040 tax form and line 18 on the short form. If you took any state tax credits, you must subtract them from this totaly before you multiply by .05.

If you have moved since you filed last year's state return, you should notify the Missouri Department of revenue at (573) 751-3391 or 290-5852 or by email (dormail@mai.state.mo.us)