Mailing interest checks cost state $100,000

State Revenue Commissioner Bart Graham said today that it cost the state 36 cents to mail each of the 278,000 interest checks that were issued because the state was slow to process and send out  income tax refunds this year.

That works out to about $100,000 for a state hurting for cash.

The Department of Revenue has mailed out more than $2 million in interest to taxpayers whose refunds were not issued within 90 days of the April 15 filing deadline. Delays in processing individual income tax returns led to the backlog, which Revenue officials say was caused by $12 million in budget cuts at the agency in the past year. More than 300 Revenue employees were laid off, many of them in the tax return processing unit.

Georgia law requires the state to pay interest on any return not processed within 90 days of April 15, or 90 days from the date the return was filed if after April 15.

The taxpayers receiving interest payments are getting an average of $7.42, although 90,000 are receiving $1 or less. Some were $20 or more. The $2 million total does not include postage and handling costs.

Under state law, the interest accrues at 1 percent per month after the 90-day limit. But the 90-day clock doesn’t begin ticking until April 15, no matter when the taxpayer files a return. Any taxpayer who filed a return on time but did not receive refund before July 14 should receive an interest payment.

After appearing before a Senate budget panel this morning, Graham told reporters that “some” more jobs may be lost in tax return processing if, as expected, he has to continue cutting his budget because of the state’s ongoing fiscal crisis. However, he said his department would do everything possible to avoid being so late on returns that the state has to pay interest again in 2010.

10 comments Add your comment

Bill

October 20th, 2009
11:56 am

Let me get this right…it cost theState of Georgia $100,000 (in postage) because it laid off qualified employees who would have done the job efficiently and in a timely fashion…to save money in a Budget crunch! Let’s add in the cost of the paper, envelopes…not to mention the amount of intere$t for each recipient…and the so-called “$aving$” literally evaporated.

Mitch

October 20th, 2009
2:35 pm

Uh, Bill, read the story. $12 million was cut from their budget, which caused $2 million in interest checks to be sent out, which cost $100,000. So, the savings didnt “literally evaporate” — there is a $9.9 million difference between $12 million and $2 million + $100,000.

Gary

October 20th, 2009
8:17 pm

Un, Mitch, that’s still not the whole story. Yes, there was a budget cut of $12 million, but the processing center only recieved $2.4 million of that cut. This is the area where the reduction in staff caused the state to owe $2 million in interest for the late processing of refunds. In addition to the $100,000 in postage, we also have the cost of envelopes, check printing costs, and staff time to make it all happen. On top of that we also have the cost of computer time and the reporgraming of the computers to actually calculate the interest (see previous story on this). So, yeah, all of these costs ate up the $2.4 million in cuts in the processing center.

This is a perfect example of where making cuts often costs more than fixing other issues. Of course, we don’t really know all of the story behind all of this and what politics are involved behind the scenes. Commissioner Graham is ultimately responsible for this, and he should have insured that resources were where they were needed in order to save tax payers the greatest amount of money will insuring services.

Mitch

October 20th, 2009
10:16 pm

Sorry Gary, you are bringing a pocketknife to a gunfire here, bud. First of all, the $100,000 figure included the postage, envelope, printing etc. That’s what it meant when it said it cost $100,000 to send the checks. Reading is fundamental, Gary.
The Legislature sets the budget, agencies cannot move money around within their allotments. At the end of year, if they need to shift some around to meet needs, they have to go in front of the Fiscal Affairs Committee made up of, you guessed it, legislators.
If you want to blame someone for money being cut from the Dept of Revenue, there are 180 Reps and 56 Senators that voted for the budget, I suggest you get to dialing. Its gonna take you a while.

AngryMom

October 20th, 2009
10:34 pm

When cuts are as deep as they now are with state budgets, you have to expect service to be affected. Today it’s interest on late refunds. So what if Georgians have to wait longer in line for services because agencies have to close up to 6 or more days throughout the year. So what if more children die because we don’t have enough social workers. So what if IBM and AT&T are not held to minimum service levels on the monopoly they now have over the state’s newly outsourced computer services. So what if you can’t reach an English-speaking person when you call the state’s help desk. So what if our children’s test scores continue to round out the bottom in national rankings because we’re furloughing our teachers. Let’s all GO FISH! It all depends on the priorities and whims of this untouchable governor and a bunch of legislators who don’t pay their own taxes.

Bewildered

October 21st, 2009
7:25 am

I received one of these checks. It was for a $1.00 overpayment of taxes. That check arrived three or four weeks ago. I felt it was foolish to go to the expense of writing and mailing it and heck, they could have just not told me or applied it to next year.

Lo and behold, two days ago I received a check from the State for $3.30 with the explanation the it was for not refunding me within the required 90 day period and for interest on the $1.00.

No wonder we are in a financlal mess!

Lundy

October 21st, 2009
11:25 am

I had a state refund check mailed to me for $1 a while back. I just received a check for $.01. Yes, a penny. It cost the state $.33 to mail it.

Base

October 21st, 2009
12:21 pm

Sonny mismanagement again.

GeorgiaPeach

October 26th, 2009
2:52 pm

File electronically. I did that back in early Feb. and had my refund before the end of Feb.!

BigWaste

November 2nd, 2009
4:13 pm

My son got a check for .72. I agree with Bewildered, they could have just either issued a credit or donated all of that $100,000 to some other cause. What’s he supposed to do with it? Making the time to go to a bank and stand in line for .72 is sooooo not worth it. He threw it away.