The tax man is running behind last year’s pace, but he should have all state income tax refunds in people’s hands by the middle of next month. The head of the N.C. Revenue Department offered that projection this morning to state lawmakers.
“Last year, we caught up around May 13; this year, we expect to catch up around the same time,” Revenue Secretary Kenneth Lay explained to the General Assembly’s Revenue Laws Study Committee. “As we process all of the returns, we are working with the budget office and the state controller’s office on a daily and weekly basis to ensure that we are getting the refund checks out as quickly as possible.”
“We do send them out every week,” Lay added. “There’s some amount that goes out, and we determine what that amount is in working with the controller’s office and the budget office.”
The Revenue Department has processed 1.4 million refunds, Lay said. The department has returned $980 million to taxpayers. “That 1.4 million returns is a little behind last year — about 149,000,” he said. “Our refunds are behind by about $81 million vis-a-vis last year.”
“If anyone were to ask, we’re probably about four weeks behind in getting the checks out,” Lay added. “What we are telling people is that if you are due a refund, you will get a refund. It’s really a reflection of the cash-flow position that the state happens to be in.”
Just one lawmaker questioned the delay. “I’ve heard from a constituent who filed [for] a refund back in January and has not received it yet,” said Rep. Jennifer Weiss, D-Wake. “Are you trying to do this in the order of when you received them, so those folks who did prepare their returns early can get them sooner rather than later?”
Lay responded that refunds are mailed on a “first in, first out” basis, subject to conditions. “There are a lot of things that can happen to a return,” he said. “An electronic return has about a 4 percent error rate. A paper return has a 40 percent error rate. There’s a much greater likelihood that the paper return is going to be held out in terms of an exception.”
“When people say they filed on a certain date, and their neighbor filed on the same date, [but] the neighbor got it and they didn’t, a lot of things could have happened,” Lay explained. “It could have been arithmetic errors — which are very common — transposition of Social Security numbers, so it could be a number of things.”
A complex return also can cause delays, Lay said. “No two people are ever quite the same,” he said. “It’s unlikely that an electronic return that had no errors in it, that was filed in January, that is not under audit, [that] they would not have received their check. So if someone has not received a check and they filed in January, chances are there was an error, it’s under audit review, or there’s some other thing involved.”
State law encourages the Revenue Department to get refunds in taxpayers’ hands by May 31. After that date, taxpayers begin accruing 5 percent interest on the money the state owes them.
Mitch Kokai is an associate editor of Carolina Journal.