It’s Time to Return the Favor

In a service provided to the Internal Revenue Service for some time, 32 of the states have been holding back state income tax refunds from people who owe back taxes to the federal government. Rather than giving the money back to the tax filers, the states send it on to Washington to help satisfy the deadbeats’ debt to the federal treasury.

Now it’s time for Washington to reciprocate and have the IRS help the states with state-tax debtors who, for whatever reason, manage to qualify for federal tax refunds.

Washington sources say the program would not cost any money or pose administrative problems. There is no apparent opposition from the federal tax folks. And governors, including California’s Pete Wilson, and state tax administrators enthusiastically support the idea.

With good reason. State Finance Department officials say that California stands to pick up $85 million in lost revenue in the first year if the program is implemented. The only reason the Internal Revenue Service is not reciprocating now is that it has not been specifically allowed to do so by the Congress.

Rep. Nancy L. Johnson (R-Conn.) has introduced legislation with the co-sponsorship of Rep. Robert T. Matsui (D-Sacramento) to authorize the IRS to help the states. She is trying to make the measure part of the tax legislation compromise being worked out now in Washington.

This is one of those ideas that is so simple and makes so much sense one wonders why it hasn’t been done yet. Ways and Means Committee Chairman Bill Archer (R-Texas) should heed requests to include the proposal in whatever tax legislation emerges from Congress.