Release of tax refunds are approved amid improving collectionsMay 17, 2010, 1:22 PM HST · Updated May 17, 1:28 PM 0 Comments
The release of state tax refunds has been approved amid improving collections. The state will begin immediately issuing refunds for income tax returns that were processed during the months of January and February.
Refunds will be processed by the Tax Department on a first-in-first-out basis, with the first refunds going to those who were earliest in filing their tax returns. Refunds for taxpayers with automatic deposits will begin on Friday, May 21. For taxpayers without direct deposit, refund checks will be mailed starting Friday, May 28.
Officials will continue to assess the State’s cash flow before determining whether additional tax refunds can be processed before July 20, which is the deadline to comply with the legally allowed 90-day refund period.
The administration opted for the initial refund delay in order to avoid tax increases next year. Another reason given for the delay was to avoid additional cuts to education, health and human services and other programs. It was intended to mitigate the state’s projected $721 million revenue shortfall for fiscal year 2010, which ends June 30, 2010. The administration projected the refund delay would have provided an estimated one-time savings of $275 million.
Governor Linda Lingle who made the announcement today said the move was a direct result of improving tax revenue collections for the first 10 months of the current fiscal year.
Total estimated refunds to taxpayers who filed in the first two months of the year is approximately $125 million, and represent an estimated 60 percent of the $207 million in claims to date. Out of the 331,000 tax filers, an estimated 143,000 or 43 percent will receive refunds.
As of April 30, 2010, actual tax revenue collections indicate the revenue decline for the current fiscal year will be smaller than forecasted by the Council on Revenues. For the first 10 months of FY10, actual tax collections were down 1.0 percent. In contrast, the Council on Revenues has forecasted negative revenue collection growth of 2.5 percent.
Governor Lingle called the revision an encouraging sign saying, “We are still cautiously monitoring expenditures and future tax collections. At this time, we believe getting refunds to taxpayers is the appropriate thing to do. I would like to thank the public for its patience as we continue to address our budget shortfall while at the same time positioning Hawaii for a brighter economic future,” she said.
The media release advises the general public NOT to call the state Tax Department to check on the status of refunds, saying it will slow down the processing.