New Jersey Herald

N.J. State Income-Tax Refunds Will Be Delayed

New Jersey Herald — January 24, 2017

By David Danzis New Jersey Herald

New Jersey residents who are used to getting a quick refund from their state income-tax fillings will have to wait a bit longer this year, the state Department of the Treasury announced.

A press release from the department said state refunds for 2016 will not go out until at least March 1. The delay, according to the department, is so that the state can use "additional tools" to "protect New Jersey taxpayers from refund fraud and identity theft." The department did not elaborate on what those tools are or why the use of them would cause delays.

"These enhanced efforts could result in early filers experiencing a slight delay in receiving their refunds," the announcement stated. "Processing returns and distributing refunds safely and efficiently is a key goal for the Division (of Taxation)."

Returns filed electronically may take a minimum of four weeks to validate and process, while returns filed on paper may take a minimum of 12 weeks.

Citing tax fraud and identity theft prevention, the federal government is also delaying tax refunds this year for individuals and families who qualify for the Earned Income Tax Credit or the Additional Child Tax Credit. The federal delay is the result of the Protecting Americans from Tax Hikes Act of 2015, or PATH, and will only impact early filers. The PATH Act made the Earned Income Tax Credits permanent, but in order to garner Republican support for the bill, the fraud and identity theft provisions were included.

Ann Vardeman, program director of New Jersey Citizen Action, said the state's action will effectively double the time it takes for early filers to get a refund. Vardeman said that while the delays may be well-intentioned, they will undoubtably impact low- and moderate-income earners the most.

"It's something we're extremely concerned about because the people who need the money the most are going to have their returns delayed," she said.

In past years, state income-tax refunds were usually issued in about 10 business days, Vardeman said.

Tax refunds can sometimes account for up to 20 percent of a low-income individual's or family's annual income, she said. Because those taxpayers are often in need of their refund money right away, they may forgo using Volunteer Income Tax Assistance or other reduced-price income tax preparation services and instead use for-profit businesses who offer refund advances, Vardeman said. Those advances are actually loans that include interest.

"Not only do they have to pay for the person to prepare (their taxes)," Vardeman said, "but if they take the loan they're going to have pay interest on that. It can lead people to get into a cycle of debt. The whole thing is very upsetting."

Monica Conover, manager of United Way of Northern New Jersey's free tax preparation program, said low-to-moderate income earners should note that a for-profit tax preparation will not result in getting a faster refund.

"United Way of Northern New Jersey strongly encourages families to seek out IRS-certified free tax sites in their communities," Conover said. "These sites can save families the average $200 it can cost to use a paid preparer in addition to making sure they get back the maximum return they are owed."

Conover also said that while filing for the Earned Income Tax Credit and experiencing the required delay may cause families short-term financial stress, the longer term payoff is worth the wait.

"Families should not be dissuaded from claiming either Earned Income Tax Credit or the Additional Child Tax Credit as they can result in families receiving up to $6,000 in return," she said. "The EITC has been proven as the country's top pro-work, anti-poverty policy, improving life for millions of workers and their children."

Over 600,000 New Jersey taxpayers receive the Earned Income Tax Credit, Vardeman said, but "much more" actually qualify for it.

New Jersey Citizen Action offers free tax preparation services to households earning $54,000 or less.

United Way of Northern New Jersey partners with NORWESCAP RSVP and the IRS to provide free tax preparation at three sites in Sussex County. The three sites in Sussex are at the Center for Prevention and Counseling in Newton, Sparta Senior Center in Sparta and Franklin Cares at Skylands Medical Group in Franklin.

United Way's office on Spring Street (in the New Jersey Herald building) also serves as a drop off/pick-up location for those who cannot wait in person to have their tax return completed.

Households earning less than $64,000 annually are also eligible to use MyFreeTaxes.com, a free, online tax preparation program provided by United Way and H&R Block.

Federal refunds for those who qualify for the Earned Income Tax Credit or the Additional Child Tax Credit will not be issued prior to Feb. 15, the IRS has previously announced.

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