Misperceptions, confusion persist on intangibles tax

The man, let’s call him “Jack,” walked in to enjoy coffee with friends in Marion, and announced he was really disgusted.

Jack said he’d received a tax bill from Marion County on something called intangibles tax for $13. Jack thought it was tax on a savings deposit of $5,000 that wouldn’t even make $30 at today’s low interest rates.

“Is this some kind of a mistake?” Jack asked. “What is this anyway?”

His friends said it was no mistake, that there was an intangibles tax, and he probably owed it because he lived in Centre Township since the tax was optional township by township. They said they probably didn’t owe an intangibles tax, even though most of them had savings, because they lived in other townships.

But it was a mistake, probably on Jack’s part, because his figures aren’t right, according to Marion County officials. And his friends were only partly right.

Jack probably would have been even more upset to learn that the only reason some of his friends didn’t pay an intangibles tax is because they didn’t report what they are legally required to report, or, to be charitable to them, perhaps what they reported didn’t make it back from the state to the county.

Marion County Treasurer Jeannine Bateman said all of Marion County has a .0075 intangibles tax on earnings from stocks, bonds, savings accounts, accounts receivable, certificates of deposit-basically anything that earns interest income that isn’t real property.

Real property would mean tangible property, something you can see touch and feel, such as land or buildings.

The .0075 intangibles tax equals .75 hundreths percent, or three-quarters of a percent, of your interest income that is owed to Marion County, she said. The tax is not required for a county to collect in Kansas but is optional, according to county law.

Marion County Clerk Carol Maggard said for Jack to owe $13 intangibles tax, his earned interest would have had to be $1,750. She said $1,750 multiplied by .0075 equals $13.13 tax.

Maggard said even had Jack earned 5 percent interest on $5,000, the interest income he received would only have been $250, making the intangibles tax at .075 percent only $1.88, and that would not have had to be paid. Kansas law provides that the intangibles tax owed has to be $5 or more to be filed.

Kansas law also excludes interest on real estate mortgages and on individual retirement and Keogh accounts.

Cities and townships also can levy intangibles taxes to be collected for them along with the county tax. Maggard said Goessel residents pay an additional 2.25 percent to bring their intangibles tax to 3 percent, and Peabody residents pay an additional 1.125 percent to bring their intangibles tax to 1.875 percent.

Residents of Burns, Durham, Florence, Hillsboro, Lehigh, Lincolnville, Lost Springs, Marion, Ramona and Tampa pay only the county’s .075 percent intangibles tax, she said.

The intangible tax for Centre Township that Jack’s friends speculated about doesn’t exist. Maggard said residents of the townships of Blaine, Catlin, Centre, Clear Creek, Colfax, Doyle, Durham Park, East Branch, Gale, Grant, Lehigh, Liberty, Logan, Lost Springs, Milton, Moore, Risley and Wilson pay only the county tax.

Residents of Clark Township pay an additional 2.25 percent to bring their total to 3 percent, the same as township residents in Menno, Peabody, Summit and West Branch. She said Fairplay residents add 1.125 percent to pay 1.875 percent.

Both Bateman and Maggard agreed the intangibles tax probably easily takes the lead as the most unpopular tax in the county. They encouraged taxpayers to pause to remember again that the percentages given here are against the earnings of accounts, not the totals of accounts.

Bateman said the only way the county knows what to charge is according to what an individual reports on an income tax form to the state of Kansas-and the state then reports to the county, or on a form available at Maggard’s office in the courthouse.

She said it is not true that financial institutions report interest earnings, or that money is not taxed if it’s put in institutions outside the county.

Maggard acknowledged that this makes the intangibles tax collected dependent on the honesty of the taxpayer and the efficiency of the reporting system.

“One reason it’s not liked is because it’s not really an enforceable tax,” she said. “There’s no way for us to be checking every taxpayer to see if they do or don’t have savings of some type.

“People who pay (intangibles tax) certainly can know some people with these earnings who don’t pay and never do.

“The townships can by board decision, just as can cities or counties, do away with their portion of the intangibles tax. Of course they have to go through some legal hoops with resolution and publication.”

In the meantime, people like Jack may want to go to Maggard with some documentation to discover what is really owed.

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