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William Perez

California to Delay Tax Refunds, Again

By October 13, 2010

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The state of California will be delaying tax refunds along with other payments, effective for California tax returns that are processed by the state on or after October 7, 2010. "There is not enough money in the treasury to meet all of the State's current payment obligations," reports the California State Controller's Office, which has published a set of frequently asked questions about the delayed payments. The Franchise Tax Board, the state tax agency for California, has likewise issued an advisory notice.

This is now the second time in two years that California has delayed tax refunds as a cash management tactic. Previously, California delayed refunds from January through April 2009 and issued taxpayers registered warrants promising future payment. This time around, the state does not plan to issue registered warrants just yet. "While the Controller does not believe IOUs are warranted at this time, they are still a possibility, depending on how October and November receipts and expenditures compare to budget projections, whether there are elements in the newly-enacted budget that will provide cash to the State, how big an external borrowing will be required, and how quickly that borrowing can be secured," the Controller's Office stated in their notice.

Individuals might be eligible to earn interest on their delayed refunds. "Once there are sufficient funds in the state Treasury, personal and business income tax refunds will be paid. If personal income tax refunds are not paid by November 30, and the tax returns were filed by October 15, they will accrue interest at a 4% rate. No interest accrues on delayed corporate income tax refunds," according to the Controller's Office.

The state will issue refunds based on the delivery method indicated on the tax return: either through direct deposit or by check. The state will also apply refunds towards next year's estimated taxes if that option was indicated on the return.

As a personal opinion, I suspect that the cash situation California finds itself in was engineered in part by last year's budget. The budget for 2009/2010 made a number of tax changes. One notable change: estimated tax payments for California were re-structured to require 70% of tax to be paid in by June 15, eliminated the requirement to send in a September 15th payment, with the remaining 30% of tax due in January. Thus it's little wonder to me that California faces a cash crunch at exactly this time of year.

More about: California personal income taxes | California state tax profile | Top 10 mistakes on California tax returns


Comments
October 28, 2010 at 2:02 am
(1) Desiree says:

Yes, it is a shame that after finally completing all these tax returns and working hard to get refunds people will still not receive them in a timely manner. The government system must change and sadly, it will probably resulting in tax rate increases and stricter tax policies that we will have to equip our clients for in the future. Not getting your payments on time is ridiculous. There must be interest added. The domino effect is hitting us all and payment for holding taxpayer refunds should be enforced.

May 22, 2011 at 7:10 pm
(2) James says:

Just another California blue state joke. An out of control state government that insists on disgraceful spending, taxing and borrowing. Who pays? The minority of people of pay tax and those who benefit are those who continue to leech off the system.

This is not a tax problem, its a spending problem. This level of dependancy on government handouts should never have gotten this far. No doubt the Democrats, twisted to the core with political correctness, will demand that honost tax paying americans fwit the bill once more.

Land of the free handouts because of the brave taxpayer.

March 19, 2012 at 11:00 am
(3) Thomas says:

I have e-filed my 2011 Ca. Return w/direct deposit. The refund is supposed to take 7-14 days. I was notified via email through Turbotax 10 days ago that my return was accepted. I checked the status today on my refund to find that now,it won’t be processed for up to 10 F#@cking weeks! I am an Oregon resident who used to reside in California and I will NEVER move back for reasons like these. Just another example of this one sided revenue system that doesn’t hesitate to get their “pound of flesh”,and will do everything within its power to drag their feet when the money is supposed to go back to the hard working (tax paying) individual.

What do you think would happen if all taxpayers would simply say to the State/Federal tax man…”please allow 12 weeks for me to process your tax bill before payment is sent”?

January 28, 2013 at 9:20 am
(4) chris douglas says:

Moving out of the state of CA gets tempting tax season after tax season!

March 8, 2013 at 12:18 pm
(5) Sharon Westover says:

I received an e-mail for a R225 rejection. Is this valid?

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