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I-Team 10: Interest on late tax refunds covered by contractor, not taxpayer

Posted at: 07/03/2013 6:24 PM
Updated at: 07/04/2013 10:45 AM
By: Berkeley Brean



The State Department of Taxation and Finance says the interest incurred on late tax refunds is covered by the contractor processing the returns, not the taxpayer. This is the latest in the ongoing story over problems with paper-filed tax returns.

In a statement to News10NBC, the State Department of Taxation and Finance writes, "costs associated with (the work to fix the problems with paper tax returns) -- including staff overtime and interest payments -- is provided for in the contract, and will not come at additional taxpayer expense."

Read the full statement below

The Tax Department contracted with an organization called New York State Industries for the Disabled to help process paper tax returns. I-Team10's phone call to NYSID has not been returned.

The Albany Times Union is reporting that the Department of Taxation and Finance has "authorized almost $2 million in overtime since January — a 506 percent jump from a year earlier" to help fix the paper-filing problems.

The Times Union also reports, "From January to June, tax department employees worked 57,698 hours of overtime, costing $1,973,382. For the same period of 2012, the staff worked 9,304 hours of overtime for $325,504.

From January to June, tax department employees worked 57,698 hours of overtime, costing $1,973,382. For the same period of 2012, the staff worked 9,304 hours of overtime for $325,504.

The most recent I-Team10 investigation:

I-Team 10 went straight to the top to get answers about those late tax refunds. It's a problem that's almost exclusive to people while filed their taxes on time, but filed them on paper.

I-Team 10 has been following this for a week and when the New York State Department of Taxation and Finance didn't answer our questions, we decided to take them to the governor.

The state says 96% of taxpayers have their refund. And the tax department says they've already exceeded last years refund amount. But I-Team 10 is still getting calls and emails from people who filed on time and don't have their money.  Almost all have one thing in common, they filed on paper.

I-Team 10's Berkeley Brean met up with Governor Cuomo at the University at Buffalo.

Brean asked, “Governor, there are a lot of people in the state who filed their taxes on paper and still don't have their refund. What if anything are you doing about that?”

Gov. Andrew Cuomo said,  “About 96% or 97% of the refunds have already been sent out and the tax department is working on the remaining 3%.”

Cuomo says it's a problem with volume. But I-Team 10's reporting shows that it's a processing problem with the organization contracted to help process paper returns.  It's called New York State Industries for the Disabled. Even the State Comptroller's Office says it has "identified some errors with paper filed returns."

Brean asked, “We heard it's a processing issue with people who filed their taxes on paper. “

Cuomo said, “Yeah, I haven't heard that. I heard that 96% to 97% of the refunds are already done so they're working on the remaining 3%.”
Brean said, “But those are people who filed their taxes electronically. The problem is with people who filed their taxes on paper. Seems like the new contractor that the state taxation and finance contracted with is doing something with the processing where people aren't getting their money.”

Cuomo said, “Yeah, I haven't heard that.”

Our local state lawmakers have.

Mark Johns, Republican, Fairport, said, “Like I said, we recently got a dozen or so phone calls and we followed up with them.”

Assemblyman Joe Morelle, Democratic, Irondequoit Majority Leader, said, “We started to get calls and letters about this from constituents who have not received refunds. Obviously, that's very troubling.”

For the first time, the New York State Tax Department is admitting in this release that the problem is with their processing contractor. This is not your fault.