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OPINION

Editorial: State owes prompt tax refunds

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Comments (5)

Wednesday, February 17, 2010

(Updated 3:00 am)

Time is money. The longer the state holds income-tax refunds, the more it benefits from the use of the money at the expense of the people who rightfully own it.

N.C. Revenue Secretary Ken Lay says his department will hold on to refund checks a little longer than usual to make sure the state keeps sufficient funds in its accounts for the rest of the fiscal year, which ends June 30.

"We are managing the cash flow very carefully," he told The News & Observer of Raleigh. "We are managing the distribution of refund checks as well."

"When you're writing those checks to pay your bills, you want to make sure that you have enough in the account to pay each one of them," Lay said in a separate interview with the Associated Press.

The refund checks amount to money that belongs to taxpayers. They haven't given the state permission to manage it for them. It should be returned as quickly as it can be processed. Delay is unfair and costly. The state wants taxes owed paid on time, and it should extend the same courtesy regarding money it owes. Refunds should be treated the same way other obligations are handled. Vendors, suppliers, contractors and state employees wouldn't accept delays in payments due them to help the state manage its cash flow; neither should taxpayers.

State leaders ought to be aware that taxpayers have budgets of their own to manage. Many of them are experiencing acute cash-flow problems these days. If they've overpaid their taxes, the state already has benefited enough from the free use of the extra money and should return it promptly. The sooner taxpayers get their money back, the quicker it can be used for purchases that pulse through the economy, to everyone's benefit.

The state also delayed refunds last year, when rapidly declining tax revenues shot a huge hole in its budget. This year, it should have anticipated and planned for shortfalls. Miscalculations aren't acceptable now.

Time is money, and the money should be returned to its rightful owners on time.

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Panacea

February 17, 2010 - 8:15 am EST

Amen to that!

There should be a reasonable amount of time the state has to process returns submitted before the April deadly, say 2 weeks. After that, the state should pay the taxpayer interest. After all, if you are late paying what you owe, you have to pay interest.

mamaboilermaker

February 17, 2010 - 8:35 am EST

One of the state's delay tactics last year was to harass taxpayers who had more than the standard 1.8 children (or is it 1.9.) My husband had to go show some bureaucrat a long list of documents to prove we were not lying about our childrens' existence. I wanted to just march into the Revenue Department with all my kids and say "I personally gave birth to all these kids while fully conscious. They all look like me and live in my house. Now give me my refund." Husband, being cooler headed, thought that might trigger some sort of retaliation, so he handled it. I think the state was just doing whatever it could to delay refunds.

This from the same state that just takes your word for it on a voter registration form, by the way.

notoriousBLOG

February 17, 2010 - 10:29 am EST

They do not have the money, they have spent it. So as a delay tactic they are calling audits on people who have large numbers of deductions and are due sizable refund checks. This is their tactic rather than reduce the spending. Welcome to big government.

Illiterati

February 17, 2010 - 10:46 am EST

Hm, I owe taxes to both the state and federal gov't every year. I also have a few cash-flow issues. Would the state be cool with it if I held onto my funds a little later than, say, April 15 so I can be sure to have sufficient funds in my accounts?

[Edited to add:] If I pay my taxes late, I pay hefty interest and penalties. The state holds your refund—YOUR money—but pays you no interest or penalties. If you're managing your withholding so that you get a big refund each year, you're not managing your money wisely and you're giving the gov't an interest-free loan. Recalculate your withholding so you're either at a break-even point or so you pay a small amount on April 15.

JackK

February 17, 2010 - 12:07 pm EST

Have there been lots of reports of delayed refunds? I ask because I filed my taxes on a Tuesday and got my refund the following Monday. Am I just lucky or was my refund so little they could afford it, I wonder.