Check's in the Mail -- State Tax Officials Refute Worries of Refund Delays

There's no denying the multibillion-dollar budget gaps roiling state governments from Albany to Sacramento. But are reports of possible state income tax refund delays exaggerated?

At least a half dozen coffer-barren states, including New York, were reportedly considering freezing refunds as a way to offset cash flow problems, according to a story published Friday in USA Today, and which was picked up and displayed prominently by the Drudge Report, as well as by ABCNews.com. A similar state tax refund delay story ran earlier in the week on CNBC.com.

VIDEO: Possible Tax Refund Delays
null

But officials in New York insist that while there is currently a halt in the issuing of state refund checks, it is only for two more weeks, and only because the state cannot issue any more refunds until the new fiscal year starts on April 1.

By law, the state can only pay out a maximum of $1.25 billion in individual refunds in the current, 2009-2010, fiscal year, and that the cap, lowered by $500 million earlier this year, was reached.

"On April 1, we'll release that $500 million to around 700,000 individuals, with no other delays after that," Brad Maione, a spokesman for the New York State Department of Taxation and Finance told ABC News.

A spokesman for New York Gov. David Paterson's budget office explained that the idea of further delaying the payment of that $500 million had been considered as a way to free up cash to close a $9 billion budget shortfall, but the governor withdrew the idea. Paterson's spokesman deferred to Maione who stressed the refund money will be released April 1, as planned.

Meanwhile, in California, which currently faces around a $6 billion budget gap, the state controller, John Chiang, said earlier in the week that state tax refunds would not be delayed this year. California was forced to delay refunds last year.

Only four states, Alabama, Hawaii, Kansas and North Carolina have expressly indicated that tax refunds will or could possibly be delayed, according to Sujit CanagaRetna, senior fiscal analyst at The Council of State Governments.

Nine states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

Interviews with spokespeople and officials at many of the largest state taxation departments – including in states facing the most significant budget gaps – revealed a much less gloomier picture.

States Pledge Timely Refunds

Georgia, Illinois, Louisiana, Michigan, Minnesota, Pennsylvania, and Virginia are among the states insisting that there are currently no plans or expectations for any tax refund delays.

"We're actually sending out electronic refunds faster than ever," explained Stephanie Weyant, a spokeswoman for the Pennsylvania Department of Revenue.

"Last year there were some delays as a result of some staff reductions but we've added temporary workers to make sure refunds are sent out on time," said Bert Brantley, a spokesman for the Georgia Department of Revenue.

One reason states are reluctant to delay refunds is interest payments which can often kick in 90 days after the April 15 deadline.

Last year, for example, Georgia eliminated hundreds of second and third shift tax refund preparer positions to save $12 million and ended up having to pay $2 million in interest payments as some residents waited until September for their checks, Brantley explained. "It caused an uproar so I think state officials decided not to have a repeat of that."

Page
  • 1
  • |
  • 2
Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...
See It, Share It
PHOTO: Firefighters rescue a woman who got stuck in a chimney in Thousand Oaks, Calif.
Ventura County Fire Department
PHOTO: Apple Pay is demonstrated at Apple headquarters on Oct. 16, 2014 in Cupertino, Calif.
Marcio Jose Sanchez/AP Photo
PHOTO: Up in Ash: Mount Sinabung Erupting
Tibt Nangin/Anadolu Agency/Getty Images
PHOTO: Defendant Jodi Arias testifies about killing Travis Alexander in 2008 during her murder trial in Phoenix, Feb. 20, 2013.
Charlie Leight/The Arizona Republic/AP Photo
PHOTO: Kim Kardashian, Kanye West, their daughter North West and Delphine Arnault attend the Givenchy show as part of the Paris Fashion Week Womenswear Spring/Summer 2015, Sept. 28, 2014 in Paris.
Bertrand Rindoff Petroff/French Select/Getty Images