Gov. Butch Otter has allowed a bill to become law without his signature, saying he’s concerned that it’ll reduce collections by the state Tax Commission by as much as $5 million in the first year it’s in effect. The bill, SB 1047a, limits the Tax Commission when it garnishes a delinquent taxpayer’s pay to taking only up to 25 percent of the taxpayer’s wages. And if the IRS is also going after that same taxpayer’s pay for back taxes, the state would be limited to 10 percent.
“Currently, garnishments for back taxes can go up to 100 percent,” Rep. Lawerence Denney, R-Midvale, told the House when it passed the bill on March 25. “While there may be some value in the collection process to be able to garnish at 100 percent, there are also many problems that would be created by taking 100 percent of somebody’s paycheck. … I believe that this is a reasonable compromise.”
The governor, in a letter to lawmakers, said he encourages the Legislature “to carefully review the impact of this legislation and make adjustments where they are needed.” You can read Otter’s letter here.
The subject may be familiar to lawmakers because a former House member, four-term Rep. Phil Hart, revealed that the IRS was garnishing 100 percent of his legislative pay for back taxes, penalties and interest. In that case, however, the federal agency left nothing for the state to grab. Sen. Jim Rice, R-Caldwell, proposed SB 1047a, saying limiting the garnishing should result in more collections in the long run, as people wouldn’t quit their jobs.