Where’s My Money? State Delays Tax Refunds

Where’s My Money? State Delays Tax Refunds

Chris Martin waited four weeks for his state income tax refund—and finally got it. 

But tens of thousands of other Rhode Islanders are still waiting for their refunds—with no definitive word from the state on just when the payments will be issued. The payments are being delayed while the state waits for other revenue to cover them. In all, $36.3 million in refunds owed to 53,000 residents is being held up, according to Paul L. Dion, the state’s Chief of Revenue Analysis.

“We are releasing them as fast as we can, given what is coming into our coffers from other revenue sources. We understand it is a burden on people,” said Dion—who noted that he has yet to receive his own refund. “We’re not trying to cheat anybody or anything like that. We’re putting them out as quickly as we can.”

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Martin said he had been counting on his refund to pay bills. “Every little bit counts. I was counting on that money. It’s just hard to stretch every dollar,” said Martin, a Warwick software salesman who has a young child.

“I’m not sobbing or crying or anything,” he added. “I’m just a regular guy trying to make it happen.”

On May 17, Martin e-mailed the Rhode Island Division of Taxation to ask where his refund was. “I have checked DAILY on your site to see where my refund is......and nothing!!!” Martin wrote. “This is a high priority as I need to pay my mortgage, fill my oil tank, pay my utilities, and so on and so forth.”

Three days later, after no response, he sent another e-mail and then contacted his state rep, Al Gemma. Yesterday, he said the refund finally showed up in his bank account.  

Gemma told GoLocalProv he didn’t think the state was being fair to people like Martin—especially when taxpayers face fines and penalties for being late with their payments. “I don’t think that’s right to hold people’s money,” Gemma said.

In Some Cases, Refunds Taking Double the Time

Normally, a refund is approved and processed about a week after the state receives a personal income tax return. A refund check is then issued about one to two weeks later. But now refunds are being sent out about three weeks after being processed, Dion said.

By law, the state can hold off on a refund for as long as 90 days, before it has to pay interest. 

The state is running late in large part because the deadline for filing personal income taxes was pushed back from April 15 to May 11, due to the severe floods this spring. 

Dion said the state needed to hold off on tax refunds to make sure it had enough to pay back a $350 million loan. Because revenue from income taxes is not evenly spread throughout the year, the state has to borrow some money at the end of each summer to pay its expenses. It then pays back the loan once tax revenues peak—typically between January and May.

The refunds, which are processed each Monday, are being held up and later released in groups. The refunds processed April 12—$10.9 million to 2,150 residents—was issued in the first week of May. The April 19 payment of $12.4 million to 25,366 Rhode Islanders was released on May 17. The state is still holding on to the April 26 payment—and every one processed since then—until more money from other revenue sources flows into state coffers.

So far, the amount of payments issued far exceeds the amount delayed. To date, Rhode Island has refunded $167.4 million to 327,978 residents, according to Dion. The average refund is $520.84, Dion said.

Assistant Tax Administrator Peter McVay said the Division of Taxation had received an uptick in calls from people inquiring about their refunds—but, he added, the volume of calls always goes up during tax season.