Tax Lawyer's Blog

Tax News.Com reports that 45 states have experienced sharp revenue decreases in the past year: 

Taxes collected by the 50 states dropped by 11.7% overall during the first quarter of 2009 compared to the same period a year earlier – the largest such decline in the 46 years since such data has been available, according to a new report.

Overall state tax revenues fell to the lowest first-quarter level since 2005, the Rockefeller Institute of Government, the public policy research arm of the State University of New York, said in its latest report on state finances.

The decline in personal income tax was particularly sharp, and the report describes an “unprecedented” decline of 17.5% as the weakened economy continued to hammer state budgets.

Michael Cooper of The Gainesville Sun said it’s only going to get worse:

As bad as the first quarter was, the second quarter is shaping up to be even worse, the report said. Preliminary data for the first two months of the quarter, April and May, collected from 45 states, indicated that tax revenues declined by 20 percent compared with the same period last year.

That will force states — many of which are already raising taxes or fees, resorting to layoffs or furloughing employees — to come up with more ways to raise or save money.

With the states running these huge deficits don’t expect leniency if you are delinquent in paying your state taxes.

And keep an eye out for state governments finding different and creative ways to raise funds.

For example, in Florida the Department of Revenue (DOR) has just announced that it will begin imposing a 10% administrative fee on taxpayers with outstanding debts older than 90 days.

Ostensibly this fee is needed to cover the costs of additional enforcement, but everyoine knows it’s just another delinquency penalty – one that was not passed by the Florida legislature and not signed into law by the Governor as is constitutionally required.

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