Thread: States may hold onto tax refunds for months

States may hold onto tax refunds for months

Updated 24m ago
By William M. Welch, USA TODAY

Residents eager to get their state tax refunds may have a long wait this year: The recession has tied up cash and caused officials in half a dozen states to consider freezing refunds, in one case for as long as five months.

States from New York to Hawaii that have been hard-hit by the economic downturn say they have either delayed refunds or are considering doing so because of budget shortfalls.

"It's an indicator of how bad it is," says Scott Pattison, executive director of the National Association of State Budget Officers. "You know things are bad when you have to do that."

New York, hit with a $9 billion deficit, may delay $500 million in refunds to keep the state from running out of cash, says Gov. David Paterson.

Hawaii's Department of Taxation says some residents may not see state income tax refunds until the end of August, The Honolulu Advertiser reported. It was part of a plan by Gov. Linda Lingle to deal with a revenue drop-off by pushing costs into the next fiscal period, which begins in July.

States often do not have a timetable for refunds because delays are based on cash flow. Most states typically issue refunds within 30 days.

Delaying refund checks isn't unprecedented, Pattison said, but it is something virtually no politician wants to do, because taxpayers are owed the money and in most cases want it fast. Delays in paying refunds and other state bills can trigger interest on those overdue payments, depending on state laws, he said.

California's massive budget shortfall of more than $20 billion last year prompted it not only to delay tax refunds but to issue billions of dollars in IOUs to vendors and others who were owed money. State Controller John Chiang called the delayed payments a "shameful chapter in the State's history" when the IOUs ended last September.

California still faces budget problems, but Chiang said that revenue is running ahead of projections so far this year, lessening the threat of a repeat.

"Californians should expect to receive their hard-earned tax refunds on time," Chiang said.

The delays come as some states continue to face deep budget holes, even as economists say the nation as a whole has begun recovery. In a recent report, the budget officers group and the National Governors Association said state fiscal conditions "have continued to worsen," and that state revenues can be expected to lag one to three years behind a national recovery from recession.

This fiscal year, the report said, 36 states have cut nearly $56 billion in spending, and 30 states have cut funding to public and higher education.

http://www.usatoday.com/news/nation/201 ... unds_N.htm

This is why you should stop paycheck withholding and bank that money until April 15th. I did that almost the entire 15 years I was collecting a paycheck.

So what's new? They screw up our economy with illegal immigration, free trade treason and mandated taxation ... call us racists because we want to enforce US immigration law .... call us xenophobes because we want to protect our trade to protect our manufacturers to protect our jobs to protect our incomes .... call us greedy tax cheats because we want a voluntary simple consumption tax like a Fair Tax that doesn't require a refund .... and after bankrupting our country, they're going to abscond excess tax payments from the American People because these stupid treasonous governments spent tax money they weren't authorized to spend. That's right, governments have no authority under US or State Law to spend tax payments not owed. It's common law fraud to spend tax payments not owed.

Prosecute these states for tax fraud and stop this nonsense.

www.fairtax.org

Here's a thought......why don't they weed out refunds going to illegal aliens committing overt, rampant tax fraud?

It would help considerably with the budget and those who are legitimately owed refunds could receive them in a timely fashion

Although it won't surprise me to see something like that eventually happen...especially here in Az where they are really coming down hard on illegals