Categorized | Government, News

State to begin issuing tax refunds

MEDIA RELEASE

State to begin issuing tax refunds as tax revenue collections show promising signs of growth

HONOLULU – As a result of improving tax revenue collections for the first 10 months of the current fiscal year, Governor Linda Lingle today announced the Department of Taxation will immediately begin issuing state income tax refunds that were processed during the months of January and February. The total estimated refunds for taxpayers who filed during this period is approximately $125 million, which represents 60 percent of the $207 million claims to date. An estimated 143,000 of the 331,000 tax filers – 43 percent – will receive refunds.

The Tax Department said the refunds, including individual, corporate, and fiduciary income tax returns, will be processed based on a first-in-first-out basis, with first refunds going out to the earliest tax return filers. 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.

The State had planned to delay 2009 tax refunds within the legally allowed 90-day refund period until early July 2010 to help mitigate the State’s projected $721 million revenue shortfall for fiscal year 2010 (FY10), which ends on June 30, 2010. Delaying the refunds would have provided an estimated one-time savings of $275 million. The Administration opted for the refund delay in order to avoid the need for additional massive cuts to education, health and human services and other programs, as well as avoid tax increases next year.

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.

“The fact that the decline in actual tax collections is less than what the Council on Revenues projected is an encouraging sign,” said Governor Lingle. “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 Hawai‘i for a brighter economic future.”

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.

Please do not call the Tax Department to check on the status of your tax refund as it will slow down the processing of the refunds.

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