Some 22,000 tax filers owed refunds by the state were told last month their money was going to be delayed for as long as 90 days.
While some whose refunds are being delayed, including James Gruber who complained in a letter to the Express Times, believed the move was an effort by the state to hold onto the money longer, thereby collecting more interest on it, Treasury spokesman Bill Quinn denies that’s the state’s intent.
Quinn said the program was instituted this year and is an attempt to thwart refund fraud by state filers. While he didn’t have numbers outlining the scope of the problem at the state level, he said the Internal Revenue Service puts the problem at $20 billion federally.
The delay is the result of a request for supporting documents – Social Security cards, w-2’s, pay stubs, 1099s – that Quinn said the state will use to verify identities and financial information filed with the returns.
He would not say what criteria the state used to flag the 22,000 returns, only that it only applied to those receiving refunds.
“It’s a compliance program aimed at preventing tax refund fraud and correcting errors that crop up on tax returns,” Quinn said.
Last week, however, the state determined that the criteria used to flag individual returns was too broad. In response, letters were sent to 9,000 of the original 22,000 taxpayers flagged telling them their refunds are available today.
Quinn said the criteria was relaxed going forward as well and would target fewer returns.
But some out there say the program’s only motive is to delay refunds for as long as possible.
In his letter to the Express Times, Gruber wrote “For the price of a tiny letter, Christie has figured out how to keep things looking fiscally promising at the taxpayers’ expense.”
“By creating a new level of complexity in getting a refund, the Christie administration has figured out a perfectly legal way to hang on to significant amounts of money due to taxpayers,” he said. “It is a diabolical way to keep the coffers full at the taxpayers’ expense. It would be curious to see exactly how many of these letters have been sent out and what value this represents to the administration.”
Quinn denied the additional information requests have anything to do with delaying the payout and everything to do with preventing fraud.
“It is not an effort to hold onto tax refunds or delay any of them,” he said. “It’s strictly a compliance program focused on refunds to ensure they are claimed legitimately and paid legitimately. It’s not an effort to control the flow of refunds or refund dollars for budgetary purposes.”
As part of the budget introduced last month, the governor proposed delaying the Homestead Tax Credit until August, pushing it into the next fiscal year and saving the state $400 million in the current fiscal year.