KANSAS CITY, Mo. — Kansas City, Missouri, charges everyone who lives or works within the city limits a 1% income tax, also known as the city’s earnings tax, but some taxpayers are eligible to have all or part of that money refunded.
Before the COVID-19 pandemic, when most workers reported to traditional office settings, there often was no opportunity to seek a refund.
But workers who don’t physically come into the city for work anymore or who work a hybrid schedule, with some workdays spent in a KCMO-based office and others spent outside the city limits, are entitled to seek a refund for those remote work days.
Prior to last year, city code gave taxpayers a five-year window to apply for a refund, but a new ordinance passed March 2, 2022, required taxpayers to file for a refund by the federal tax-filing deadline each year.
The City Council ordinance went into effect March 14, 2022, but a Bates County woman, Kim Huebert, successfully challenged the ordinance in court, arguing that the lightning-quick implementation of the new policy violated constitutional protections against retroactive action with insufficient notice.
Taxpayers eligible for refund of the KCMO earnings tax now have until Dec. 31, 2023, to apply for a refund.
In response to a KSHB 41 Sunshine Law request, a spokesperson for the city’s Finance Department said the city is reviewing refund requests, like Huebert’s, that were previously denied for the timeliness of the filing under the new ordinance.
To comply with the court ruling, KCMO also has extended the filing deadline for the 2018-22 tax years — the five years that would be refund-eligible before the new ordinance was passed — until Dec. 31, 2023.
Taxpayers can still seek a refund for those years until the end of the year, but all refund requests will have to be made before the federal filing deadline, typically April 15, beginning with the 2023 tax year and moving forward.
What should you do if you believe you are owed a refund?
- Check your pay stub. If your employer is withholding the KCMO earnings tax, it should be reflected under employee taxes along with other state and federal withholdings;
- If you don’t live in Kansas City, Missouri, but work a remote or hybrid schedule for an employer based in the city, you are entitled to a prorated refund of taxes paid for the days when you worked outside KCMO city limits;
- Vacation and sick days do not count as days not worked within city limits;
- If you believe you are eligible, create an account on the city’s Quick Tax portal or send the documentation described via standard mail to the city’s Revenue Division, City Hall, 2nd floor, 414 E. 12th St., Kansas City, MO 64016;
- The city requires that you fill out an RD-109 or RD-109NR tax form, which can be completed in the Quick Tax portal (Hint: You’ll need your W-2 for the tax year you are seeking a refund);
- Refund-seekers also must provide documentation of the days worked outside city limits, which can include an email or letter from your HR department verifying those remote days;
- The city also has a process for filing a six-month extension in some circumstances;
- If you are uncertain, consult a tax professional for advice or contact the city’s Revenue Division by phone (816-513-1120) or email (revenue@kcmo.org).
It might be worth checking your pay stub anyway.
If you don’t live in KCMO and your employer isn’t based in KCMO, you may still owe the earnings tax for days that you work at an office within the city limits.
However, in some cases like Huebert’s, a company based outside KCMO mistakenly withholds the earnings tax for a non-Kansas City resident who does not perform work within the city limits.
All of that money paid in city earnings tax is refundable to the taxpayer.
In that case, the employee should contact their human resources department about getting the withholding changed.
If the employer refuses to make the adjustment, consult a tax or legal professional — and be sure to file for your refund.
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