States Delaying Refunds
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?
Tags: taxes
I agree with you completely. This is especially true of state refunds which have very few refundable credits. We already loaned them the money all year. Now it is time to pay up. A couple of years ago my state taxes (and that of other I know) took a long time getting back. I wondered back then were they trying it. At least these states are admitting it. Now my state refund is $25 or less and I give most of that to the Emergency Shelter, National Guard Family fund and the Veterans Home. If mine is late, it no longer matters to me. They are just punishing charities and shame on them.
David, you agree with me completely? Hmmm, I might have to go back and see if I wrote this right. 😉
Luckily I didn’t have any problems getting my refund back from Delaware this year. I usually file in early Feb and got my refund about four days later. When I use to live in PA, I never did get a refund nor did I have to pay anymore to them. They always seemed to have mine calculated just right down to the dollar. Nothing owed, nothing paid. I acually liked that better.
I worked in Pennsylvania for several years, and I don’t remember ever paying or receiving anything. Unfortunately, since I lived in Delaware, with its higher rates, I always ended up writing a check at tax time.
I work in PA — the state taxes held from my check are PA ones. I do write a check to Delaware, but can deduct the taxes I pay to PA.
When I first moved here, the tax tradeoff of choosing to live in DE or PA was something of a wash. PA had lower income taxes, but MUCH higher rates of property taxes than Delaware.
Scott, your first post and David agrees with you???? 🙂 We can’t have that. 🙂
I’m as shocked and appalled as you are. I’ll try to make sure it doesn’t happen again.
This issue actually came up in my discussion with Chip Flowers. It is actually beneficial to the economy to get this money out the door as quickly as possible during a recession, as the velocity of the money can have a huge impact, macro-economically.
Sounds like more short-term good at the expense of long-term good. I have some doubts about Delaware being involved in this, though. I received my refund quite rapidly this year.
I got mine the Wednesday after e-filing on a Sat morning
Yeah, LG, I didn’t mean to imply that I thought DE would do this. I was only curious about what the law was here regarding maximum timeframe for refunds. I have not seen or heard anything that would make me think that will happen here. I e-filed my returns on Saturday. If I remember, I’ll let y’all know when I get my refund.
My husband works out of state so we always owe Delaware, but it’s not a really big amount.
I was with LG when he met with Chip Flowers – not that anyone could tell since LG’s picked up my slack – and I agree that delaying refund checks is rather short-sited. There’s a psychological effect to tax refunds… like found money, easy to spend.
Yeah, I went back and read what I wrote and wanted to be sure that I wasn’t implying that Flowers thought DE was doing that. Rather, he was speaking in general terms that a treasurer that was going to horde money and use the power of the State’s vast budget to slow pay vendors or creditors. That is pretty much the Bonini model, and it would exacerbate a recession if small businesses go out of business waiting for a check from the state.
Just as a follow-up to this post, no, there’s no reason to think Delaware is delaying refunds. I e-filed mine return last Saturday (3/13), and my refund was electronically deposited yesterday (3/18). I gotta say, that’s impressively fast. Kudos, DE Division of Revenue!