Missouri appeals court revives challenge to KCMO’s earnings-tax ordinance

KANSAS CITY, Mo. — The Missouri Courtroom of Appeals Western District has revived a problem to modifications Kansas Metropolis, Missouri, made for individuals in search of refunds of the city-imposed earnings tax.

A Cass County lady, Kim Huebert, challenged a provision within the ordinance that altered the refund course of in March 2022.

The KCMO Metropolis Council repealed a piece of the earnings-tax-refund ordinance that gave taxpayers as much as 5 years to hunt a refund for overpayment of the 1% tax residents and employees at companies inside metropolis limits pay.

Below Ordinance No. 220164, taxpayers might solely file for a refund of that yr’s taxes and had been required to take action by the federal income-tax-filing deadline.

The ordinance additionally made the refund course of cumbersome and costly for taxpayers, requiring refund-seekers to sue the town in small-claims court docket, per Missouri statute.

The Metropolis Council handed a brand new ordinance in March 2023, which largely reversed these necessities — although it did require just a little extra paperwork than the previous course of.

Nonetheless, the elimination of the five-year submitting interval remained.

Huebert, who sought a refund for earnings taxes paid in 2019 and 2020 in March 2022 solely to have it denied 4 months later, sued the town in July 2022 for eliminating the five-year window with out ample discover.

A Cass County Circuit Courtroom dismissed Huebert’s lawsuit in October 2022 after the town argued that she “didn’t have a vested proper to a tax refund.”

Huebert’s attorneys appealed, arguing the circuit court docket decide erred by permitting the town “retrospectively to extinguish her proper to hunt a refund of overpaid earnings taxes.”

The decide dominated that Ordinance No. 220164 successfully offered a brand new statute of limitations for in search of an earnings-tax refund.

However in doing so, Missouri Appeals Courtroom Decide Alok Ahuja wrote in his opinion that the town “can’t extinguish causes of motion which had been viable on the date the brand new statute grew to become efficient, until the brand new statute provides present claimholders an affordable time inside which to claim their rights after the brand new statute’s efficient date.”

Judges Anthony Rex Gabbert and Thomas N. Chapman additionally heard the case as a part of a three-judge panel.

The appeals court docket dominated that the brand new ordinance is enforceable for the 2022 tax yr and transferring ahead, which possible implies that all refund claims made after Tuesday’s federal submitting deadline for final yr’s taxes will likely be denied.

Nonetheless, taxpayers in search of refunds for 2018-2021 ought to keep the precise to file for these refunds underneath relevant metropolis and state legal guidelines throughout that point interval, Ahuja wrote.

The decrease court docket’s dismissal has been reversed and the Huebert’s case has been remanded again to Cass County Circuit Courtroom “for additional proceedings in keeping with this opinion,” Ahujua wrote.

KCMO had but to answer a request for remark in regards to the appeals-court determination.

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