LEAWOOD, Kan. — Who says you can't fight City Hall? Kansas City, Missouri, picked a fight with a spry nurse from Amoret, Missouri, over $565 and lost. Now, thousands of taxpayers in the area stand to benefit, if they act fast enough.
Kim Huebert said her goal in suing the city over changes to its earnings-tax refund policy was “not so much to stand up against taxes, but I am willing to fight for the little man. That’s what I am. If me doing something can change and make something right and make it better for somebody else, that’s what needs to be done.”
Roughly a year after Kansas City rather quietly tried to choke off refunds of its 1% earnings tax, the Bates County woman’s lawsuit has opened the door for taxpayers to recoup money owed to them as far back as 2018.
“This was my money that was being held and I didn’t volunteer for it to go there,” Huebert said. “It was paid out of payroll taxes, and I just didn’t think it was right. It’s not right for me; it’s not right for anybody.”
RELATED | Are you eligible for a KCMO earnings-tax refund? Here’s a guide
KCMO alters refund policy
Huebert works as a home-care nurse for an Overland Park company. None of her clients are in Kansas City, Missouri, and the Amoret resident doesn’t work in the city.
Still, her employer took the 1% earnings tax, which all KCMO residents and people who work within the city limits must pay, from her paychecks, forcing Huebert to file for a refund with the city.
“Filing a city tax form is not easy to find or do if you don’t know what you’re doing,” Huebert said. “By the time I got around to filing it, I called to check on it — ‘Yeah, your claim will be paid; we’re just backlogged.’ Call in another month later, ‘Yeah, it’ll probably be June or July.’ In July, I get a notification that I’m being rejected because of timely filing.”
Huebert filed for her earnings-tax refund — a refund for which thousands of people who work for a KCMO-based company but have shifted to a remote or hybrid work setting also are eligible — on March 27, 2022.
The KCMO City Council had adopted Ordinance No. 220164, which repealed the city’s existing refund process, on March 2. It went into effect March 14.
Under the old law, taxpayers could file for a refund “within five years from the date when the return for the taxable year was due,” but the new ordinance required refund-seekers to apply for a refund by the federal tax-filing deadline each year.
For taxes paid in 2022, the filing deadline was April 18, 2023. The deadline for 2023 taxes will be April 15, 2024, though taxpayers can file for an extension in some cases.
KCMO denied Huebert’s $565 refund request based on passage of Ordinance No. 220164. She was lamenting the refund denial in conversation with one of her nursing patients whose husband, Thomas West, is a licensed attorney.
“I was disappointed, and she said, ‘Mr. Attorney Man, let me get you to see what you can do about this,’” West said. “At the time, I said, ‘I guess you’re probably screwed on this,’ is what I actually said, to put it bluntly. But I decided to do some research and said, ‘Well, maybe we’ve got something on this.’ We decided to sue and got that process going.”
Hurbert takes KCMO to court
West argued that Missouri law bars a taxing jurisdiction from retroactively changing its refund policy without ample notice of the change going into effect.
“Basically, it’s called a statute of limitations,” West said. “You have so much time to file your claim. When they enacted the ordinance, they cut it off and made it effective immediately. The case law, from the Missouri Supreme Court on down, says if you’re going to shorten the statute of limitations, you have to give people a reasonable amount of time, a reasonable notice, to file a claim. Fourteen days doesn’t cut the mustard. You’ve got to have longer than that.”
Huebert and West filed the case in Cass County Circuit Court to dodge the backlog in Jackson County, but the judge there quickly dismissed the case.
“I was a little let down that they didn’t even really consider it,” Huebert said. “Kind of just, it was there and then it was gone. I felt like I was a nobody because they didn’t even really hear anything on it.”
West appealed the dismissal.
“The (Cass County) judge in that case said, ‘I’ve never had a case like this,’” West said. “I could be wrong and just speculate that he simply said, ‘I don’t know how to handle this; we’ll just let the appeals court handle it.’ He probably figured that however he ruled it would be appealed, and he was probably right.”
A three-judge panel with the Missouri Court of Appeals Western District ruled April 18 that the state constitution didn’t permit KCMO to “retroactively shorten the period within which Huebert could seek a tax refund,” overturning the dismissal and remanding the case back to Cass County.
KCMO had until Wednesday to appeal the appellate court’s decision, but none was filed.
The court’s decision doesn’t strike down the new ordinance, which will go into full effect next year, but it does open the window for taxpayers to continue to seek a refund for the last five tax years.
“I have a good sense of satisfaction about it,” West said. “Well, really I feel tickled pink because it gives them a chance to have the right thing done.”
What now? City pays up
An attorney for the city who served as opposing counsel in the case told West the city does not plan to appeal and that it’s already instituted a tax-refund amnesty program through the end of the year, giving taxpayers who’ve overpaid for the 2018-22 tax years a window until Dec. 31, 2023, to get their money back.
Refund-seekers have Huebert to thank.
“I am standing up for thousands of people, but how many people even know about it? How people have filed their city tax?” Huebert said. “I mean, I live several counties away. I didn’t even realize I needed to file for city tax, especially if I didn’t live there. When they changed the ruling, I didn’t get notified of it, but how many people watch tax laws for a 50-, 70-mile away place that doesn’t affect them personally.”
Through a Sunshine Law request, KSHB confirmed the city is giving taxpayers a chance to file through the end of the year.
“The City is reviewing all previously denied requests for refund of the City's earnings tax made for tax years 2018 through 2022, and will grant refunds for properly documented claims that were denied on the basis of timeliness,” the KCMO Finance Department said in response to KSHB 41’s Sunshine Law request. “In addition, the City is allowing taxpayers who have not yet filed for a refund of earnings tax for tax years 2018 through 2022 to do so through December 31, 2023. Any requests for refund must be accompanied by proper documentation to evidence the refund claims. Tax year 2023 refund requests and beyond must be submitted by the federal income tax deadline, in accordance with Code Section 68-393.”
The ordinance requires taxpayers to file an RD109 or RD109NR tax form and provide documentation of the days or hours worked outside city limits.
Basically, if you’ve already filed for a refund, the city may automatically process the refund, but it wouldn’t hurt to reach out and double-check.
Taxpayers who believe they are owed a refund for any year from 2018-22 should pull together documentation and file for a refund before the end of the year.
Refunds for any earnings taxes paid in 2023 will have to be filed by the federal tax-filing deadline next year or they will be denied under the new ordinance.
City officials said there are currently more than 1,400 refund requests totaling more than $1.05 million, but those numbers could go up if more eligible taxpayers — especially those impacted by stay-at-home orders in 2020 and 2021 — apply for a refund.
“It feels good to know that you’ve done something to help your fellow people out and to know that they can file their taxes and get their returns back,” Huebert said. “A lot of people worked from home for a part of that time that is in question. Actually, if they were working from home, they might not have had to file city tax, even though they were working for a company within the city limits. It’s going to be a lot of money off the city that they’re going to end up having to pay. There’s going to be a lot of people that it’s going to help, too.”
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