North Carolina To Pay Late Fees?

Lawmaker would punish N.C. for late tax refunds

Paul Woolverton | Fayetteville Observer | 5.27.2010

State Sen. Phil Berger of Eden thinks that the state should be punished for being slow to send people their tax refunds.

This is the second year in a row that North Carolina has been slow to issue tax refunds. Berger, a Republican and the Senate minority party leader, wants the legislature to pass a law [SB1366] that would require the state to pay a 10 percent penalty if the refund is issued more than 45 days after the taxpayer files his tax return.

“If I file a tax return, and I’m late, then the state’s going to assess me penalty and interest from day one,” Berger said. It’s only fair, he said, that the state should be penalized if it’s late with the taxpayers’ refunds.

“I’m saying they’ve got 45 days to give Mr. Smith or Mr. Jones or Ms. Jones their money back, because it’s their money; it’s not the state’s money.”

Refunds have moved out slowly because the recession has reduced the state’s tax income. The government is hanging onto the money longer to cover its expenses.

In 2009, the refunds ran behind, too, but all were issued – 2.7 million refunds worth $1.9 billion – by May 13.

So far this year, according to the Department of Revenue, 2.4 million refunds worth $1.7 billion have been issued. The state has to pay interest, at a 5 percent annual rate, on any refunds issued after May 30.

Revenue Department spokesman Thomas Beam said the agency has no comment on Berger’s legislation.

The bill’s prospects in the Democratically controlled General Assembly are not clear. Berger filed the bill on Monday, and it was referred to the Senate Finance Committee on Tuesday.

Sen. Clark Jenkins of Tarboro, a Democrat and co-chairman of the Finance Committee, said he is willing to give the bill a hearing but he questions the idea, although he has not yet read the legislation.

“I think there could be a lot of extenuating circumstances as to why that return might be late,” Jenkins said. Sometimes taxpayers make errors on their paperwork that delay their refunds, he said, and North Carolina has a cash-flow problem this year.

Berger is willing to adjust his idea to apply only to correctly filed tax returns, but he said that the state’s cash-flow crisis was avoidable and taxpayers due refunds shouldn’t be punished by it.

Recessions occur on a regular basis, Berger said, and the legislature grew its budget too much during good times and should have limited spending to be better prepared for the inevitable downturns.

“Yes, this recession is worse than previous recessions,” he said. “But the fact that we’ve got a recession, in and of itself, is not, in my view, an appropriate or valid excuse for their problems with cash management.”

Wonder what would happen if we used Sen. Jenkins “extenuating circumstances” excuse for paying our state income taxes late. Sorry, NC Department of Revenue. You’ll just have to wait. I have a “cash flow problem.”

The bill has been referred to the Senate Finance Committee. Please contact the following NC Senators to express your support of this bill that promotes fiscal responsibility.

Read the original story at Asheville Tea Party