THE D.C. COUNCIL is moving to change District tax forms so that they more closely resemble those used by the federal government. This week, the Committee on Finance and Revenue approved a bill that could come before the full council as early as March 2. The measure would greatly simplify the preparation of a city tax return by allowing the same deductions and exemptions in many areas as those granted by the federal government.>
At the present time, more than a dozen line items, from charitable contributions to pensions, are taxed one way by the federal government and another way by the District. But in most states, including Maryland and Virginia, this is not so. These jurisdictions use the figures from the federal return to compute the amount of state tax. Such a system makes tax preparation easier for citizens, and tax audits less costly for state governments.
>The council has had tax conformity legislation on its docket since council member Hilda Mason first proposed the reform a few years ago. Mayor Marion Barry originally supported the concept and even forecast a savings of $271,000 in auditing expenses if the measure was enacted. Congressional passage of the federal tax reduction bill last summer, however, made the need for conformity more urgent.
>The new federal law allows a tax deduction for interest on All-Savers certificates and a tax deferral on contributions and interest on individual retirement accounts. Taxpayers in states where conformity is the rule are automatically allowed these same breaks on their state returns, but residents of the District are not. Council members Charlene Drew Jarvis and Betty Ann Kane introduced bills on All-Savers and IRAs respectively, and revenue and finance committee chairman John Wilson responded quickly by scheduling action on a comprehensive conformity bill.
The full council and the mayor should agree on this reform. It will ensure D.C. taxpayers simplicity and equity in the preparation of returns, which should make April 15 a little easier for everyone.