Local Politics

State can't repay thousands of tax refunds

Posted January 5, 2011

Department of Revenue, Revenue Department

— The North Carolina Department of Revenue can't pay about $2.5 million owed to 7,900 taxpayers because their returns are too old to receive a refund under state law, officials said Wednesday.

Teams of workers from the Revenue Department in recent months processed about 242,000 tax returns dating to 1994 that had been flagged by state computers as possibly including overpayments, which would make them eligible for refunds. Because department employees never confirmed the overpayments, returns were never paid.

Canaan Huie, general counsel for the Revenue Department, told lawmakers Wednesday that the state issued $96 million in refunds to about 43,000 individuals and businesses but that the statute of limitations had expired on another 7,900 filers due refunds.

Under state law, no refund can be issued or tax collected after three years from the date the tax was due or two years from the date the tax was paid.

"We do not believe that we have the authority to release those refunds," Huie said.

"We want it to go. It's not our money," Revenue Secretary David Hoyle said. "It's not the state's money – it's the taxpayers' money – but we're bound by the constraints of the law."

About 480 individuals and businesses who owed the state money likewise won't have to pay because the statute of limitations has expired, Huie said. The total owed on those returns was about $170,000.

The Revenue Department is issuing collection notices to thousands of other taxpayers, however, after the review found that they owed the state a combined $44 million, he said.

Hoyle said he would like lawmakers to adjust the law to allow his department to issue refunds to the filed affected by the statute of limitations.

"We're going to find a way to get this worked out, and we're going to make (about 7,900) people really happy," he said. "They got no idea they're getting ready to hit a minimal lottery ticket."

Hoyle said, however, that he doesn't plan to use an amended law to pursue the taxes owed by the 480 filers who underpaid.

"They escape," he said. "If the statute of limitations has run, we're not going to try to change that so we can go back and get it. No, absolutely not."

Sen. Bob Rucho, R-Mecklenburg, said he supports the plan.

"If the state is owed money, that'll be taken care of. If the taxpayer is owed money, we want it to be cleared," Rucho said.

Gov. Beverly Perdue on Tuesday asked Hoyle and State Budget Director Charlie Perusse to devise a system to ensure taxpayers receive refunds within 30 to 45 days of filing their returns.

The past two years, the state has been slow to issue refunds because officials had to hold back money during periods of slow cash flow to ensure the state would be able to pay its operational bills.


This story is closed for comments.

Oldest First
View all
  • lkanzig Jan 6, 2011

    welcome to nc where corruption is our #1 priority!

  • Greene Giant Jan 6, 2011

    As far as I am concerned it is fraud & not held by the statute of limitations of 3 years. The State knew & as far it is really concerned it is in default due to fact that it is not meeting State law of a Balanced budget. Does that mean it is legitimately bankrupt? The problem with the State, or even this country, the politicians just can't seem to get into their heads that it isn't the State's money, but the people. The extra money that is paid in is not the State's money, but the people who it belongs to. So how many years has this been going on & how many more is it going to take till NC gets honest with its citizens?

  • Vietnam Vet Jan 6, 2011

    There should not be a statute of limitations on tax refunds from any government entity. The money is owed and the state or federal government should pony up the money no matter what the time frame. If the refund wasn't paid the fault must reside with the entity that owes the money. I also feel the reverse is also true. If taxes are owed by all rights, they should be paid.

  • federalsales Jan 6, 2011

    superman you need to get grip! the people getting refunds may have come from deductions on filling returns. we don't know why they are getting a refund anymore than the people that had to pay more taxes, the simple of it all is goverment makes rules as the game goes on each day and that is wrong, hands down...........

  • superman Jan 6, 2011

    I feel sorry for the people who were to get a refund. I was one of the fortunate who had to pay. It is simple and easy to go to your payroll office and change your withholding. If you were scheduled for a refund-- you created the problem. Change your witholding and you wont have this problem again. But you will be crying next year when you have to pay additional taxes. Take control of your life and dont leave it for others to look after you.

  • Smiling Jan 6, 2011

    Take the 6.5 Million from the cigarette tax evaders and pay the 7900 taxpayers that are due a refund.......what a novel idea!!??

  • federalsales Jan 6, 2011

    Watch what you wish for, we are talking about goverment and they do what they like at that time with no rules in black & white.

  • slickgirl24 Jan 6, 2011

    I just love how this story has completely disappeared from the front page....

  • Sherlock Jan 6, 2011

    Are they saying that if I do not pay my taxes for 2 years they will not come after me?

  • dlk13ster Jan 6, 2011

    "If you owe the state money that far back they make you pay it or else"-fjohner6288

    Actually, that's not true. The article explicitly states that about 480 individuals and businesses that owed a total of $170K WILL NOT be required to pay, because the statute of limitations is up on those totals.

    Now, you ARE correct that the state is VERY good at making sure people who owe them pay up promptly (which is why the amt. of lost revenue is so much lower than forfeited payouts), but that should hardly be considered news to ANYONE.