AUGUSTA, Maine - State Finance Commissioner Richard Rosen says the state was underpaid millions of dollars in income taxes last year because some payroll companies and employers did not adjust withholding tables to reflect changes made by the Legislature.
“It appears to us - it appears to Maine Revenue Services - that there has been an amount of tax due that has been under-collected as a result of that,” he says.
Rosen says a year ago Maine Revenue Services issued an advisory about how to figure tax withholding after the Legislature chose to phase out itemized and standard deductions for those in the higher income tax brackets.
He says its clear several employers and payroll processing firms did not make the proper adjustments and those workers have not have had enough income tax withheld for all of 2016.
Not all employers and payroll companies failed to make the change in withholding, so it is difficult to estimate how many taxpayers are affected. Rosen said it is clear it is a significant number. He said after January revenues are reported the state will have a better idea how many taxpayers have been affected.
The phase out affects individuals with more than $70,000 a year in income or married filers with more than $140,000 a year in income.
The individual income tax is the largest source of state tax revenue, expected to generate about $1.5 billion this tax year.
