Saturday, December 15, 2012
State officials say thousands of Wichita city employees have been overcharged for years on state income taxes on their retirement benefits.
But now those employees won't have to pay any tax at all on those benefits.
The Wichita Eagle reports that most of the employees will be eligible for refunds. But they can only get refunds of the last three years of overpayments.
The city and state have treated contributions to city employees' pensions as taxable income since 1985, as would be the case if they were state employees covered by the Kansas Public Employee Retirement System, or KPERS.
But the Department of Revenue now says that because Wichita has its own retirement system, which isn't part of KPERS, the tax law doesn't apply to the Wichita pensions.