The Daily Southerner, Tarboro, NC

State News

February 15, 2010

State says expect delays on income tax refunds

RALEIGH — North Carolina taxpayers will have to wait longer again this year for income tax refunds.

Revenue Secretary Kenneth Lay told The Associated Press on Friday his agency is starting now to delay refund checks for individuals and businesses. It’s all part of the state’s effort to manage cash while its tax collections remain anemic.

“It’s very much like the way a family manages their checkbook at the end of the month,” Lay said in an interview. “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.”

The Revenue Department held back on refunds last year, too. However, that didn’t become public until early March, after many taxpayers started complaining about delays. Lay acknowledged his agency wasn’t as prepared then to respond and is trying to be more proactive in 2010.

This time of year, it usually takes two to six weeks to process a return with no errors or problems and approve a refund, department spokesman Thomas Beam said. That rises to 12 weeks or longer as April 15 approaches, he added.

Lay’s office gave estimates on delays last year, but decided against doing so this year because there are too many variables for each taxpayer’s return — such as the number of schedules and whether there are math mistakes. It took the department until mid-May to catch up last year.

The department will manage the distribution on a week-to-week basis. Everyone ultimately will receive their refunds, Lay said.

“We’ll keep people informed, and hopefully we can make sure that we can overachieve compared to what we did last year,” he said.

Until now, revenue employees had been up to date returning refunds, processing 590,720 refunds for individuals and businesses and sending out $400.6 million. At this time last year, 279,246 refunds had been processed, with $263.9 million sent out by mail or electronically.

The department can’t say for sure why there are so many more refunds this year. People who know they’re owed refunds might file early to collect the money.

While North Carolina still faces revenue troubles as the sour economy extends into 2010, the situation is a little better than a year ago, when Gov. Beverly Perdue had to secure more than $1 billion in reserves and dedicated funds to ensure the state could pay its bills. Overall tax revenues in the 2008-09 fiscal year fell a whopping 11 percent, or more than $2 billion, compared to the previous year.

The state sent out 3.2 million refunds during 2009 totaling $2.9 billion, according to department data. It processed 11.3 million returns during the previous fiscal year and took in 6.9 million pieces of mail.

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