Tax Return Delay Implemented to Save State Money

The State Department of Taxation will delay payment of tax refunds for 2009.  The action to delay payment until July 1, 2010 is being taken to mitigate the state’s projected $721 million revenue shortfall.  Tax officials say delaying the refunds will provide an estimated one-time savings of $275 million which will go towards balancing the state budget.

The Tax Department will release refunds beginning in July on a first-in-first-out basis, ensuring that early filers receive their refunds first.

State tax officials say the action complies with the legally allowed 90-day refund period.  Under current Hawai‘i law, if the director of taxation approves a refund voucher within 90 days from the due date or the date the return is filed, whichever is later, and the refund check is mailed 45 days from the date of the director’s approval, no interest is paid.  However, if either of these time limits is exceeded, interest will be paid.

For faster receipt of refunds, taxpayers are advised to have their refunds directly deposited into their bank account by providing their bank routing number and account number and indicating the type of account (savings or checking) on their individual net income tax returns. Direct deposits will be the most efficient way to receive refunds.

The refund delay was originally announced in the executive supplemental budget that was submitted to the Legislature on December 21, 2009.  Beginning July 2010, taxpayers may contact the Taxpayer Services Call Center during business hours at 808-587-4242 or 1-800-222-3229 (toll free) for information on the status of their refunds.