Backlog of N.C. tax refunds should be cleared by May
Posted April 15, 2009 4:16 p.m. EDT
Updated April 15, 2009 7:24 p.m. EDT
Raleigh, N.C. — The North Carolina Department of Revenue said this week it has issued more than 1.3 million tax refunds totaling more than $900 million so far this tax season.
But if you've filed your taxes and are expecting a state refund, it might take up to 12 weeks before you receive payment.
"We're about $400 million behind where we were last year," revenue department Secretary Ken Lay said.
With declining revenue and a growing budget shortfall, the state is managing its cash flow very carefully, Lay said, by holding refunds on processed tax returns for an average of four weeks.
It's been taking up to eight weeks for taxpayers who filed electronically to receive a refund and up to 16 weeks for those who mailed in their returns.
Refund checks are going out every week, he said, and the department should catch up with the backlog of payments by May 31. Otherwise, as of June 1, the state must begin owing interest on processed refunds not mailed.
With the state of the economy, financial experts recommend using any tax refunds to pay off debt, specifically credit card debt.
According to the Internal Revenue Service, an average refund is about $2,700.
By applying that amount to a credit card, a consumer could decrease the card's balance and shorten the time until the entire debt is paid.
For example, with monthly payments of $200, it would take 62 months to pay off a credit card carrying an $8,000 balance with an 18 percent annual percentage rate.
By applying a $2,700 payment, it would take 35 months to pay off the remaining $5,300 and cut the total interest paid from $5,300 to $2,800.