This really shouldn’t come as a surprise to anyone, but states have had a particularly tough time during the recent economic downturn. Since almost all are prohibited by their own laws from running deficits, they’ve looked everywhere they can to grab as many extra dollars as they can. The latest idea (and I found out about this, of all places, from the Flyers’ broadcasters during the game Saturday) is that some states are delaying sending out tax refund checks. As the CBS article states:
Some states suffering severe, recession-induced budget problems are holding off on paying tax refunds to people and businesses.
North Carolina, Hawaii and Alabama are already doing it and others, such as New York and Kansas, might.
The states are holding or may hold onto your money as long as they can because they need to use it for other purposes, tax expert and attorney Barbara Weltman told “Early Show” Saturday Edition” co-anchor Chris Wragge.
You’ll eventually get your refund, but when depends on where you live, she explained. Laws differ from state-to-state, but most states have to issue a check (or direct deposit) within 45 days from April 15 or the date the return was filed, whichever is later. So, if you filed your return in February, the refund isn’t due until 45 days after April 15. Some states have even longer — up to 90 days — to issue the refunds without having to pay interest.
As best as I could tell, if this is still accurate, Delaware has 90 days from the filing of the return in which to issue a refund without interest. I have no idea what the interest would be, or if this is still the correct regulation. If anyone knows, I’d love to find out. I tried to wade through some of the tax code online, but I couldn’t find anything else that dealt with deadlines for refunds.
I haven’t seen or heard of anyone having issues getting their refunds on time, but it doesn’t surprise me that states would do this. On a related note it’s always struck me funny how so many people think of their tax refund as “found money”. So few seem to realize that they’re not “Getting money from the government”, they’re getting their money back from the government. Refund money is really nothing more than a zero-interest loan you make to the government. If they can hang on to it for a few extra weeks, I’m not surprised they’re doing it. I’ve always wondered what would happen if one year, everyone had their withholding calculated out right so that they paid the correct amount throughout the year, i.e., no refunds. Anyone think the idea of states holding back peoples’ refunds sounds a bit cheesy or cheap?