State tax refund delay hurts low wage earners

[Rocky_nBullwinkle 6]

With California's budget quagmire forcing an indefinite delay to state income tax refunds, taxpayers on the lower end of the income scale are most likely to feel the pain.

About 65 percent of the 10.1 million state refunds issued last year went to filers who claimed less than $50,000 in adjusted gross income, according to statistics provided by the Franchise Tax Board.

And those taxpayers were even more likely to file early in the tax season: About 69 percent of the 3.3 million refunds processed last February went to filers in the under-$50,000 category.

On Tuesday, state Controller John Chiang told the Franchise Tax Board to stop sending him requests for refunds because the state treasury would be unlikely to cover the checks.

Lawmakers and Gov. Arnold Schwarzenegger have been unable to come to terms with a state budget deficit estimated at $40 billion over the next 17 months. A precipitous state revenue drop, moreover, has eaten away at the state's cash reserves and forced Chiang to delay paying some bills, including money owed to taxpayers through income tax refunds.

Chiang's move comes as business is picking up at tax preparation offices across the state. Tax preparers said taxpayers with relatively simple returns resulting in a refund are most likely to show up early.

John Hogg, franchise owner of nine Jackson-Hewitt tax service outlets in the Sacramento area, said most of the early filers he's seeing are motivated by the prospect of huge federal refunds and more modest state checks.

Many qualify for federal earned income credit for low wage earners and stand to receive federal refunds in the thousands of dollars but had very little state tax withheld and are looking at state refunds in the hundreds of dollars.

"They're at the lower end, economically," he said.

State refund checks typically are cut about 10 days after one of Hogg's preparers transmits a return, he said. "In a couple of weeks," Hogg said, "we will start getting calls from people saying, 'I didn't get my refund – can you run it down for me?' "

At H&R Block outlets, tax preparers are seeing a greater variety of clients early in the tax season – income wise – than in past years, said Liz Garcia, a senior tax adviser in the West Sacramento district.

She suspects there are two reasons more people in higher income brackets have been in a hurry: Some wanted to file before Chiang pulled the plug on state refunds; some are relying more on their refunds this year.

"With the economy, everybody needs the money," she said.

Still, the state refund delay is likely to hit low-income families the hardest, said Mike Herald, a lobbyist for the Western Center on Law and Poverty. "It puts some people in a difficult situation because they plan on it," he said. "Maybe they bought a few extra Christmas presents because they can use the refund to pay the bill."

But he cautioned that the delay should be no reason for policymakers to rush into a budget deal that cuts deeply into health and social service programs for the poor. "The short-term pain of not getting a refund," Herald said, "is not going to be anything like that long-term pain."

It's anybody's guess when the political situation at the Capitol will clear and provide the budget cuts and/or tax increases needed to correct the cash situation.

Brenda Voet, a spokeswoman for the Franchise Tax Board, said taxpayers should continue to send in their returns for processing, even if checks aren't forthcoming. When money becomes available and Chiang fires up the check-writing machines, refunds will go out in the order in which returns were received, she said.

Source

[Rocky_nBullwinkle 6]

Should be in OT. Help Charles!

--Bullwinkle

[Cherel & Bob 0]

So what type of recourse do you have as a taxpayer when the state refuses to return your money that they owe you? Can you charge them interest? Can you refuse to pay anymore taxes until they have satisfied their debt to you? Hell maybe the legislators should have their income garnished until all citizens have been refunded their money.

So glad that I live in NH where we do not pay income taxes and do not pay any sales taxes. Hell we do not even pay our state legislators an income. Why should we encourage life long politicians suckling off the taxpayer teets. In NH the legislators are all volunteers.

"Live Free or Die"

Bob

[tallcoolone 102]

Move to a state where you don't have to worry about State Tax Returns.

Just another reason not to live in California

The land of Fruits and Nuts........

[Matt & Bing 56]

If you are getting a large refund ... especially a large State refund you have been waaaaaay over withheld. Don't give the Govt an interest free loan! Adjust your withholding!

[Matt & Bing 56]

Move to a state where you don't have to worry about State Tax Returns.

So the choices are: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

[Señor Bonito 2]

Move to a state where you don't have to worry about State Tax Returns.

So the choices are: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

Sure, there ain't no individual income tax in Texas but the sales tax rate and property tax rates are way up high. We have a modest house in Sugarland, just outside Houston, and we pay $15,000 annually in property tax to Fort Bend County. That's a killer. I only pay around real estate taxes of $4,000 for my house here in Riverside County, California. And I don't spend more that $3,500 in California state income tax. Now, do the math!

[tallcoolone 102]

Move to a state where you don't have to worry about State Tax Returns.

So the choices are: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

Sure, there ain't no individual income tax in Texas but the sales tax rate and property tax rates are way up high. We have a modest house in Sugarland, just outside Houston, and we pay $15,000 annually in property tax to Fort Bend County. That's a killer. I only pay around real estate taxes of $4,000 for my house here in Riverside County, California. And I don't spend more that $3,500 in California state income tax. Now, do the math!

Homestead your house in Texas it will knock your taxes down.

You can also fight your appraised value, easy deal.

If you paying 15K for property Tax in Texas, you have more than a modest house......

[Señor Bonito 2]

Move to a state where you don't have to worry about State Tax Returns.

So the choices are: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

Sure, there ain't no individual income tax in Texas but the sales tax rate and property tax rates are way up high. We have a modest house in Sugarland, just outside Houston, and we pay $15,000 annually in property tax to Fort Bend County. That's a killer. I only pay around real estate taxes of $4,000 for my house here in Riverside County, California. And I don't spend more that $3,500 in California state income tax. Now, do the math!

Homestead your house in Texas it will knock your taxes down.

You can also fight your appraised value, easy deal.

If you paying 15K for property Tax in Texas, you have more than a modest house......

The total tax rate, including all the local assessments, is 3.75%. We purchased the house in 2006 for $450,000 and it's 5,200 sq. ft., 5 bedrooms, 4.5 bathrooms, with a game room and media room and office. I'm almost sure that house was worth double in California before prices began to tumble.

[Ban Hammer 14,295]

Should be in OT. Help Charles!

--Bullwinkle

[dalegg 143]

I owe California $335 this year. Thinking of sending them an IOU. Better yet...maybe they will let me pay one of my neighbors who is expecting a return!

[spookyturtle 9,466]

Everything hurts low wage earners today. These are the people who feel the effects first and suffer the longest.

[Jasman0717 9]

Move to a state where you don't have to worry about State Tax Returns.

Just another reason not to live in California

The land of Fruits and Nuts........

Hey, who you calling a nut

[Heracles 417]

Everything hurts low wage earners today. These are the people who feel the effects first and suffer the longest.

Illegal immigrants being the biggest one. For every job an illegal immigrant has, it means one less job for a low income American.