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States Delaying Tax Refund Checks

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Less than two weeks ago, USA Today ran story about how states were going to hold tax refunds for months. Barely a week later, New York announced that it has started delaying income tax refund checks, estimating that delaying refunds until April 1st will “save” the state about $500 million. New York joins states like Hawaii, where some residents won’t get refunds until August, and California, where residents are starting to get IOUs instead of refund checks.

We hope that state financial issues won’t extend until next year but if you want to be prepared (and they don’t pass laws preventing this), here are two things you can do to avoid this in 2011.

Adjust Withholding

If you owe taxes, this delay doesn’t affect you. If you are due a small refund, then this delay is inconvenient but it’s not a big deal. The key then is to adjust your withholding so that you have a small tax refund or a tax bill, that way you don’t really care if there is a delay in refund payments! Here are instructions on how to adjust your tax withholding but do this with care as you don’t want to owe too much. If you owe too much, you may have to pay penalties and interest.

File Early

If you filed in February or early March, you might have gotten your return in before New York State decided to delay refund payments. If you were due a refund, this is yet another reason why you should file early! You get your own money back faster, you get to earn interest on that refund (even though savings account rates have been low lately), and now you might avoid refund delays too!

While it stinks to have your refund delayed, it does spur on better financial behavior which is a bit like seeing a silver lining in a storm cloud.

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66 Responses to “States Delaying Tax Refund Checks”

  1. nickel says:

    I sure hope we’re not affected, though it’s still not clear if I’ll owe or get a refund from the state.

  2. tbork84 says:

    Well since I am sending in the state return via mail as opposed to my fed e-file. I am anticipating a longer wait for that anyways.

  3. cubiclegeoff says:

    I always see the “adjust withholding” comment, but when you’re young and changing jobs, or getting married, or having kids, or moving, it’s a lot harder to get it right, and most calculators out there are not all that helpful.

    I was surprised that I received my refund about 2 days after I filed with my state.

  4. Mark says:

    In California, I received my refund in 5 business days this year (e-file, direct deposit, hit my books last Friday to be exact). Last year, it took a significant amount of time. I was pretty shocked seeing as how the state is so cash poor. I typically get my federal refund much quicker, but am still waiting on it….

    • ziglet19 says:

      I also got my California state refund very quickly this year. We filed at the beginning of February. So glad to get a check and not an IOU!

    • Shirley says:

      Another Californian here: I efiled our tax returns in mid February and both state and Fed deposits hit our account within a week. This year seemed even faster than usual. Strange.

  5. andrew says:

    you’ve got to love the system, if you are late paying the government, they assess penalties and interest.

    they are late paying you? eh get over it, you’ll get your money some day

    • Anthony says:

      LOL… Sums up the US government!

    • That’s what I was going to say. Pretty unbelievable.

    • bowden says:

      I guess we shold start making collection calls stating that the phone call may be recorded and this is an attempt to collect a debt. What is the interest and penelty amount anyway. They should be charged if refunds are received after April 15. That’s the rule isn’t it. lol. We can only hope for justice.

  6. Jessica says:

    I filed my New York taxes on 2/16, and they’re still holding my refund until 4/1. New York law requires them to pay interest on refunds aren’t paid within 45 days of filing; it’s my suspicion that they are withholding refunds for any returns submitted within 44 days of 4/1.

  7. I’m in Maryland and I got my check almost immediately after I filed. It’s nice to receive the money, but nothing that I would ever rely on receiving in a certain period of time.

  8. echidnina says:

    My withholding was just about perfect this year – I got maybe $10 in refund. So it wouldn’t really matter if I got it now or in August, but I can see this kind of policy having a big impact on people who get a big refund that they can use.

  9. Bryan says:

    I’m in New York and e-filed on 2/25. Got the federal return in about 1.5-2 weeks. Still waiting on the state return.

    Unfortunately I’m also unemployed but a recent grad so ineligible for benefits. I’ve been living off emergency savings since August, and also had my car die and needed a new one to get to interviews in September. So yea, I’d like my money ASAP because my savings are almost gone and that couple hundred dollars means a lot more to me than it does to NY in trying to balance their budget.

  10. jsbrendog says:

    crap. I still have to file and am due 5 months of city tax they took even though i did not live in the city. So i should bank on nyc and ny state refunds in december?

  11. zapeta says:

    I was afraid that my IL tax refund would be delayed, but it showed up right about the same time as the Federal one. I filed early just in case the state decided it was too broke to issue refunds.

  12. BibleDebt says:

    Another thing you can do is to owe a little bit. Adjust the holding far enough so you owe some, but not too much.

    • echidnina says:

      Just make sure you remember and plan ahead of time that you have taxes to pay ;) The way a lot of people talk this time of year, you’d think the gov’t was giving everyone free money!

  13. qixx says:

    In Washington there is no income tax (they just tax everything else more). Seeing this almost makes me glad i will not have this problem. But then again; i filed my return at the end January and got my refund deposit at the start of February. Makes all these tax posts almost annoying.

    • Chris says:

      Same here, except in Florida. No income tax, just taxed to do anything else except breath, and then it depends on where you are doing it.

  14. NateUVM says:

    Just filed my state taxes on Sunday (March 21st). Just got my refund from them today (March 24th). Looks like filers in MA are in the clear on this one.

    • Mike says:

      Yup, MA was actually pretty cool with their efile. Didn’t have to pay a dime to do it since I did it on their website. Same thing with the free turbo tax that I did with the federal efile.

  15. Chris says:

    Cali is allowed to issue an IOU? I know they are in the red but damn….

  16. JOSE says:

    I’m from California and filed my tax return in late January.. i received my refund via e-file for Federal but filed my State refund thru regular mail. Big mistake. I have not received anything to date as I am due approx $1,000 from the state of CA and have been given the run-arounds by the phone #s listed online and thru my tax guy. Is there anything I can do here? thanks, Jose

    • Donna Gallardo says:

      I also sent my refunds out the first week in Feb. I got the federal, but have yet to get my state. Do you know a number we can call to demand our money????

  17. Shorty says:

    I’m from the great state of corrupted Illinois. I did my own taxes via H&R Block at Home on the last week of January, 2010. I filed everything correctly, then mail the forms. 2 weeks later I received my federal income tax return using direct deposit, but I have yet to receive my Illinois state tax refund as of 04/01/2010. I went on-line to see what was happening. The only response I got was that they had received the form, and that it would take about a week for them to deposit it to my bank account. Well; this was about a month ago and counting. I tried calling, but only to get a busy signal. I do agree, that there should be a penalty charged to the state when they are late with everybody’s tax refund.

    • JJ says:

      Same boat, Sent it in early and as of today, april 21, I have not recieved my refund.

    • MisterSym says:

      I filed my taxes via snail mail in mid-February. For the past month, the IL Dep’t of Revenue’s website has been telling me the same thing:

      “Display Result

      Your return has been received. However a date for your refund has not been determined. If you filed electronically and requested direct deposit you should receive your refund in about one week. If you mailed your return, please allow 12 weeks from when you mailed your return for us to complete processing.”

      Mid-Feb until today is just over 14 weeks. And they still haven’t set a date for my refund. To say the least, I’m peeved. Mostly because they aren’t addressing the issue publicly. You’d think there would be more of a public uproar about this.

      • MisterSym says:

        Further research into Illinois DOR’s website found this FAQ (http://idor.custhelp.com/app/answers/detail/a_id/18/session/L3NpZC9qYTJBNVkqag==:

        “How long does it take to get my individual income tax refund?

        If you file your return electronically and have your refund directly deposited into your checking or savings account, you will generally receive your refund in about a week. If you file a paper return, you should allow 12 to 15 weeks for your refund.

        To check the status of your refund, you may visit our automated Income Tax Refund Status Inquiry application. Please note that the refund inquiry application only allows you to check on the current year’s refund status. To inquire about a prior year’s refund status, you may either call us at 1 800-732-8866, or you may email us by using the “Send an Email ” tab at the top of this screen.
        Answer ID 18
        Categories Individual Income Tax
        Electronic Filing
        Date Created 07/29/2005 10:55 AM
        Date Updated 03/30/2010 03:17 PM ”

        So, now I guess it’s 12-15 weeks. They also had this gem FAQ on what to do if you don’t receive your return (https://idor.custhelp.com/app/answers/detail/a_id/43/related/1):

        “What should I do if I have not received my individual income tax refund check, and according to your web site it has been more than 10 days since you mailed it?

        If it has been more than 10 days since your refund check has been mailed, please call the Comptroller’s Office for assistance at 1 800-877-8078.
        Answer ID 43
        Categories Individual Income Tax
        Date Created 07/29/2005 11:53 AM
        Date Updated 11/05/2009 08:43 AM “

        • meister says:

          They have now changed the language again to note 15 weeks being normal… definitely just trying to hold onto the money as long as possible.

          “How long does it take to get my individual income tax refund?

          If you file your return electronically and have your refund directly deposited into your checking or savings account, you will generally receive your refund in about a week. If you file a paper return, you should allow up to 15 weeks for your refund.

          To check the status of your refund, you may visit our automated Income Tax Refund Status Inquiry application. Please note that the refund inquiry application only allows you to check on the current year’s refund status. To inquire about a prior year’s refund status, you may either call us at 1 800-732-8866, or you may email us by using the “Send an Email ” tab at the top of this screen.
          Answer ID 18
          Categories Individual Income Tax
          Electronic Filing
          Date Created 07/29/2005 10:55 AM
          Date Updated 06/03/2010 08:29 AM”

  18. Anonymous says:

    The poor suffer again. What else is new.

  19. eric says:

    I swear my state is getting more messed up by the moment…

  20. Gene says:

    Filed CA return electronically on 5 Feb. To date no refund. Federal paid within 15 days of filing. Nothing on CA Franchise Tax Site about delays in payment.

  21. Dawn says:

    This is ridiculous! I mailed early Feb (because they denied filing electronically). Their website says allow 12 weeks….I have and then some. Still no check! The kicker is I live in WI and work in IL and paid all year to IL when I wasn’t even suppose to be. So IL has had my money for nearly 18 months now and should have never had it in the first place.

  22. Lori says:

    i have one even better. I accidentally sent my IRS payment of nearly 1000.00 to Illinois State along with the Illinois state check and Illionis cashed both. When I asked for a refund of a check that never should have been cashed (or forwarded to the fed govt), they told me they have no idea when I’ll get the money back. This is now mid-July.

  23. Mel says:

    I filed my TX return 4/5/10 received a 4464 C letter from the IRS dated 4/10 indicating they will hold my refund and review my return.
    If I did not received another letter form the IRS to call them in 45 business days. I called the IRS after the 45 days and they told me they don’t see a reason why I have not received my refund. They put a request in their system to check on the status and someone from the IRS will call me back. I also was in formed if I don’t hear from them in 30 business days to call them back. So, when August 2nd comes arround…you bet I will call them again and I’m sure I get another BS awnser to call them beck in 30 business days. I’m sure if I would owe the IRS that they want their money right away…with interest. Now I need my refund…I should charge the IRS 30% interst for ech month they are late. No wonder why so many people are fed up with them.

  24. michelle says:

    mailed my IL return on April 15, it’s been over 15 weeks, still no refund. When I use their online Income Tax Refund Status Inquiry, I keep getting the message (even today, in August!) “Your return has been received. However a date for your refund has not been determined. If you filed electronically and requested direct deposit you should receive your refund in about one week. If you mailed your return, please allow as long as 15 weeks from when you mailed your return for us to complete processing.” Does anyone have a suggestion of what to do?

    • Pat Dodson says:

      I filed my Il return in February, in May I received a letter saying they were missing something. I mailed it back the same day with a copy of the document they had lost. It is now 120 days later and when I called they said the time has changed to 150 days. I’m sure they are just playing with tax payers money and there is nothing you can do to speed up the process.

  25. margaret says:

    I’m owed over $7000 by the state of CA. Mailed my return on April 15, and as of August 20, have seen no refund. When I check the CA Franchise Tax Board website, I’m told that it’s still being processed and given a phone number to call. When I called, I was told to call back on Sept. 1st. I was assured that I’d be paid interest at a rate of 4% beginning 45 days after April 15. My question is, if I’m issued an IOU, what happens with the interest? If I don’t get arefund or IOU by April 15, 2011 and apply the refund to my 2010 CA taxes, what happens to the interest? BTW, due to several K-1s, it’s impossible to know what my income is going to be until the last minute, and I therefore can’t simply adjust my withholding to avoid being over-withheld. If I’m under-withheld, there’s hell to pay in interest, penalties, etc.


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