New York State Delays State Income Tax Refunds

3:41 PM, Mar 18, 2010   |    comments
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By JOSEPH SPECTOR
Gannett Albany Bureau

ALBANY, NY - State income-tax refunds will be delayed by several weeks as the state struggles to manage its cash flow amid growing budget deficits, officials said Tuesday.

The move will save the state about $500 million by delaying income-tax refunds until April 1.  The state stopped paying the refunds on Monday.

It means that taxpayers who filed for refunds in late February and early March will have to wait a few extra weeks to get paid, officials said.  Usually it takes three to four weeks to process a state tax return; people who filed within that period will have to wait about six weeks.

Income-tax refunds filed after April 1 are not expected to be affected.  The tax filing deadline is April 15.

"This is certainly a difficult action and this impacts New Yorkers waiting for their refunds, but the fact that we even have to consider options like this speaks to how grave our fiscal circumstances are," said budget spokesman Matt Anderson.

Assembly Speaker Sheldon Silver, D-Manhattan, called the governor's decision "inappropriate," but indicated legislation at this point wouldn't like stop this year's refund delay.  "I think it's wrong, and I think we're going to have some legislation that will deal with that," he said Wednesday.  "I don't know if we can stop it now, but we can certainly stop it in the future."

Assemblyman Richard Brodsky, D-Greenburgh, Westchester County, and Sen. George Winner, R-Elmira, are sponsoring bills that would require the state to process all state tax returns within 30 days.  If not, the state would have to pay interest on the overdue checks.

"This is money that is owed to the taxpayers.  This is their money, not the state's money," Winner said, adding the state wouldn't give people a break if they filed their taxes late.

Senate Democrats, who are in the majority, are expected to release their own legislation to ensure people are paid within 30 days.  Their proposal would seek greater transparency by the governor's office if a delay occurs and also provide incentives for people to file electronically.

Paterson apologized Wednesday for having to delay income-tax refunds, but said the state's fiscal woes dictated it.  He said the state has about $14 billion in payments due by the end of March and is running out of money to pay all the bills.

Comptroller Thomas DiNapoli offered a similar assessment, saying the state faces a cash-flow crunch before month's end.  Paterson said that, "I apologize that we had to do this. I hope it serves notice on the public of how serious our financial situation is."

Taxpayers who filed for refunds in late February and early March will have to wait a few extra weeks to get paid, officials said.  People who filed within that period may now have to wait about six weeks.

Last month, state officials quietly began talking about having to delay income-tax payments because the state faced a $1.4 billion shortfall before the fiscal year ends March 31. 

What the state is doing is capping how much it pays out in tax rebates before the fiscal year ends.  The cap had been set at $1.75 billion.  Now it's being capped at $1.25 billion.

About $7 billion in state refunds are paid out each year.  About 1.35 million taxpayers have received rebate checks already this year, state officials said.

The income-tax payments are complicated because of the state's budget calendar.  Because the fiscal year runs from April 1 through March 31, income-tax rebates are paid over two fiscal years.

 

Gannett ContentOne - Albany, NY

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