Smart TaxesSmart Taxes

States are holding on to tax refunds

Strapped states are keeping taxpayers' money longer to solve cash-flow problems.

By Kay Bell Feb 23, 2010 11:45AM

Remember when everyone was snickering at California for issuing IOUs instead of tax refunds?

 

Quit laughing. More strapped states are holding on to their residents' tax refunds longer.

 

North Carolina's Revenue Secretary Kenneth Lay has announced that his office is delaying  refund checks that both individuals and businesses are due. Holding on to the money is a cash-flow necessity, Lay said, because the state is facing a shortfall due to "anemic" collections, a common problem across the United States.

Even paradise is having refund-money issues.

 

The Hawaii Department of Taxation, which already has up to 90 days before it has to send out checks to taxpayers, says that come July 1 it will release refunds on a "first-in-first-out basis." Delaying refunds will give the Aloha State a one-time savings of $275 million.

 

In New York, one of Gov. David Paterson's budget proposals could put taxpayers' refunds on hold to help deal with the Empire State's budget deficit. The proposal, which could delay some refunds for weeks or even months, is projected to provide short-term savings of $500 million.

What's a taxpayer to do aside from freak out? Right now, not much.

 

But if you are one of the taxpayers who will be waiting a while for your state refund, or even if your state was able to pay your tax cash in a timely manner, you might want to reconsider even being put in this situation.

 

Adjust your withholding now (at the federal level, too) so that you'll get your tax money throughout this year. In fact, see if you can fix it so that you'll owe your state tax collector a few dollars instead of the other way around.

 

That way it will be the tax department waiting on you in 2011.

 

Related reading from Don’t Mess With Taxes:

VIDEO ON MSN MONEY

191Comments
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.