No $220 Rebate Checks for Military Families?

By Steve Haner

More than 400,000 Virginians failed to receive their $110 “Windfall Income Tax Rebate” in 2019 because, for perfectly valid and acceptable reasons, they didn’t file their returns by July 1.  That allowed the Commonwealth of Virginia to hold onto $46 million more of the un-legislated state tax increase created by conforming to new federal tax rules.

Some undetermined number of those were military families with a Virginia “tax home” who routinely get extra time to file. It could include servicemen and women deployed in combat zones.

Del. Jason Miyares, R-Virginia Beach, had his House Bill 607 all teed up to fix that today in the House Finance Committee. It would have allowed those late filers to get the rebate this year, instead. But the bill was not up for quick action today in order to pass, but in order to die. The Northam Administration was prepared to oppose the bill and seek its defeat, given it blows a hole in the revenue estimates for the new budget.

The Thomas Jefferson Institute for Public Policy was present and prepared to speak for this modest piece of unfinished tax reform business, but it was not to be. Committee Chair Vivian Watts, D-Annandale, announced it would be heard instead in a subcommittee, probably next week. Subcommittees meet in small rooms, with no recorded video. Subcommittees are where only a handful of legislators can kill a bill. Oh yeah, this place has really changed now that party control has shifted.

But then, maybe it has changed a bit. A few minutes later in the same meeting, rebellious Democrats joined with Republicans to kill one of the Northam Administration’s tax bills. It was a stunning, if probably short-term, setback that also blew a hole in the Governor’s budget. More on that bill, dealing with who has to have income reported to the government on a 1099 form, later in this post.

When the General Assembly decided last year to respond to the income tax windfall with small, one-size-fits-all and one-time-only tax rebates, it was highly questionable policy. But good or bad, it ought to be uniformly applied. It made sense that people who missed the deadline to file for valid reasons might not qualify for a check immediately, in the first round, but all understood the opportunity was there for a second round of reform or rebates.

In fact, the legislation that passed in 2019 set up a segregated fund to hold the additional income tax “windfall” for future action, and during the fall it was projected it would soon come to contain hundreds of millions of dollars. But something happened. Governor Ralph Northam simply swept the dollars into his budget and put in language to kill the Taxpayer Relief Fund. It barely lived past the election before dying, unless this General Assembly rebuffs him.

So, the fiscal impact statement on Miyares’ bill warns that its passage would require cuts to the general fund! That statement is usually more than sufficient to kill any proposed tax cut or tax credit. The other result of that statement might be that the Finance Committee simply sends the bill over to the spending committee, House Appropriations, to let it do the dirty work and kill the bill.

More permanent tax reform would be a better use for that Taxpayer Relief Fund, should it somehow be revived. People are starting to wake up to what a Roanoke Times columnist recently called a stealth tax increase. But if this is what we get, those rebates, then all should get them, one way or another. My parents once upon a time were one of those Virginia taxpaying families sending in tax returns from a military APO address.

It wasn’t the fiscal impact statement that defeated the Governor’s bill on 1099 tax reporting, but Delegate Lee Carter (D-Manassas) asking a couple of pointed questions. Carter is a Lyft driver in the off season and understood exactly what House Bill 730 sought to do. Many of these “gig economy” companies use an exception to file a 1099 report on contractor’s income with the government only if it exceeds $20,000. Employers with contract employees who don’t use the exception report income above $1,000.

The wonky details are in this fiscal impact statement. Again, the Governor’s budget assumed the bill would pass and went ahead and allocated the revenue in advance, about $20 million a year. The same bill passed 16-0 in the Senate Finance Committee this morning without a peep. But once discussion got going, House committee members wondered if it might not be more than $20 million on the line.

“Who is expected to pay, the companies or the workers?” Carter asked. The workers, he was told. He then gave an impromptu and impassioned speech about the struggling drivers he meets in the line at Dulles Airport, “and increasing payments from them by $20 million is not something I can support.” He called the effort disturbing and reprehensible.

Whether or not the contracting company files a Form 1099, the contract worker is required by law to report the income and pay the tax. But it seems many do not, and without that 1099, neither the Internal Revenue Services nor Virginia tax collectors can catch that easily. This is not just Uber and Lyft drivers, but the whole host of Internet-driven services, including grocery delivery and operations such as Airbnb.com.

The lobbyist for the traditional lodging firms that compete with Airbnb was there in both House and Senate to praise the bill. Guess why. I know you can figure it out.

The 1099 bill is not dead in the House Committee. The vote was initially a tie, and then somebody who had voted aye moved to the nay column. Under the rules, any motion to revive a bill must come from somebody who voted on the prevailing side. As has been noted on other issues, this will be a taxing session and the Governor has a massive budget to pay for.  Let the games begin.

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19 responses to “No $220 Rebate Checks for Military Families?

  1. “Who are you required to send a Form 1099? You are required to send Form 1099 to vendors or sub-contractors during the normal course of business you paid more than $600, and that includes any individual, partnership, Limited Liability Company (LLC), Limited Partnership (LP) or estate.”

    and regardless, any earned income, INCLUDING TIPS has to be reported and tax paid on it.

    Where most Uber and Lyft drivers end up filing schedule C where they can claim the standard govt mileage – 58 cents a mile and that includes both miles for fares and driving to pick up fares.

    Say you have 30K in income – that’s probably about 1800 (after the 12200 std ded) in taxes but if you drive 20,000 miles @ .58 that’s 1060 dollars deduction on that one expense. Ride-share folks can deduct a fair amount of other stuff including meals. AND if you are older than 25 and younger than 65, you can get an earned income credit. AND you can deduct things like health insurance premiums… etc…

    Most rideshare folks come out ahead on taxes so it makes no sense to not report the income and risk trouble with the IRS.

  2. I was wondering how many did not get the checks. We did not get our original $220 Rebate check, which they told me were sent out in late September.

    In late November I called to inquire and they said they would send us replacement check, unless their records showed the check was already cashed. Within a few weeks we got a $220 replacement check in the mail.

    I wonder how checks they cut that were not received or cashed yet (lost)? More millions?

    • I hope you spent it well. $46 million divided by $110 is 418,000. That’s my back of the envelope calculation. These are taxpayers who didn’t get the rebate because they had filed for an extension, legitimately. That would NOT include people who simply failed to file without requesting an extension. Or people where the USPS lost the check….

      • Not sure exactly what your calculation actually shows. How many taxpayers in Virginia? How many eligible for refunds? How many got and how many not?

        • Is this info consistent with your data?

          2016 data total taxpayers: 3,872,398

          Filing single :2,239,611 (58%) = 246 million
          filing joint: 1482,440 (38%) = 326 million
          filing married separate: 150,347 (4%) not sure if MFS gets refunds.

  3. So, Vivian Watts of Annandale wants to screw military families and Lee Carter of Manassas doesn’t think he should have to pay taxes on his income. Must be nice to be among the kings and queens who spend their days in Richmond looking down their noses at us little people.

    • I suspect the chair was asked to delay the bill. As a courtesy I had informed the Guv’s peeps that I was showing up to push hard for its passage. This can still get done. The Lee Carter thing was just a marvelous surprise while I was sitting there, the kind of impromptu theater that keeps me coming back.

  4. Steve’s fine article is 2nd part of matched pair to go along with Jim’s “Two Hundred Pamunkeys, $200 Million Project”, namely, they tell:

    1/How Virginia’s state government can effectively hide or delay, and perhaps avoid altogether, a tax rebate due thousands of American soldiers, sailors, and marines, who are residents of Virginia, while protecting America;

    and

    2/ How Virginia’s state government simultaneously can hide and/or quietly pass without care or concern, scads of burdensome taxes on whole groups of working class people in Virginia, without their notice or knowledge;

    and;

    3/ How, simultaneously, Virginia’s government can enable the building of a $200,000, 000 +++ Pamumkey gambling casino in downtown Norfolk, home of the US Navy Atlantic Fleet, and thousands of soldiers, sailors, airman, and marines, so as drain them and their families of their monies earned at home, while they are working hard to defend Virginia, and America.

    This sums up Virginia’s modern government hard at work stripping money out of the hands of hard working Virginia citizens, doing them far more harm than good.

    • The deep lesson we learn again and again is that the ruling class in Virginia’s government cares only about getting and keeping money and power, the few there that get it by sucking money and power away from everyone else who resides in or passes through the state. A thoroughly corrupt system of government.

    • The bill Steve was talking about would not have enacted “burdensome” taxes on working class people. It would have improved the ability of the state to collect the taxes those people owe under current tax law. Or, are you in favor of people, working class or not, being able to avoid their legal tax obligations?

      • Let’s have the General Assembly hammer the waitresses and waiters and lawn mowers, painters and gardeners next?

        Meanwhile you can take a spin being a Uber driver in DC region and see what it feels like to you, thanks to your dysfunctional corrupt government’s messing up the roads for the last fifty years so all the moguls feeding Richmond could get rich beyond belief.

  5. As for the tax rebate and the special taxpayer relief fund, if I were certain they would disappear in the next budget year, I am certain that everyone involved was also certain. Of course, I agree that the general public was not that tuned in, but the most of the general public did not know about the rebates until they got them.

    As for the bill on 1099 tax reporting, I have little sympathy for gig economy employees not wanting to pay taxes on their income. However, under usual budget procedures, the Governor should not have included that $20 million in his budget bill. You are not supposed to spend money until you are authorized to have it.

    • Thank you for the confirmation that the Taxpayer Relief Fund was, for many, a politically-expedient pre-election…..lie.

      • It wasn’t a lie–the rebates were mailed out. And I don’t recall candidates of either party campaigning on continuation of the tax rebates or the Taxpayer Relief Fund. I agree that it was a politically expedient budget gimmick.

      • “a politically-expedient pre-election…..lie.”

        Steve’s observation reminds me of a Wall Street Journal interview of Brian Lamb, when upon his retirement a few years, the legendary, incorruptible leader of C-SPAN, (its founder in 1979, executive chairman, and CEO of C-SPAN) was asked what he remembered most about years in the Nation’s Capital?

        To which question Lamb replied without hesitation: “All the lying.”

  6. here’s to the “radical” left:

  7. If you look at the above GOP platform then compare and contrast that with today’s politics where the GOP says the Dems have become “radically left” – one must wonder which party has really moved.

    I’d say the modern day GOP has moved far to the right and now rejects most of the positions it used to hold.

    • And I would say both parties have moved away from the center, for various reasons, leaving many of us stranded while the tails wag the dogs. That said, Ike was never a traditional conservative and could just as easily have been anointed as president as a Democrat. My Dad would have voted for him as a commie. I still get goose bumps when I remember the Mauldin cartoon on his passing: A row of crosses. “It’s Ike himself. Pass the word.”

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