Bill would speed return of tax refunds

ALBANY -- The state Tax Department would have to send refunds to New Yorkers within 30 days of receiving a return, under a bill passed by the state Senate and being advanced in the Assembly.

The sponsor of the bill, Sen. Carl Marcellino (R-Syosset), said there have been too many instances of the agency dawdling instead of getting refunds out the door. He also noted that last year then-Gov. David A. Paterson considered a plan to delay refund payments amid a state cash shortage.

"We don't think a governor has the right to do that or should have the right to do that," Marcellino said. "Especially in these times, government shouldn't be holding on to people's money."

State tax officials said that, unlike the federal government, New York analyzes refund claims before payments go out.

"If we paid refunds without first reviewing the returns, it would be very difficult to recover these funds -- if not impossible," said Brad Maione, spokesman for the state Department of Taxation and Finance. In an average year, the practice enables the state to block about $300 million in erroneous claims, Maione said. About 68 percent of state returns claiming refunds were paid within 30 days, he said. The rest were paid within 60 days.

Previous senators have tried to advance legislation similar to Marcellino's, but did not get far. But Marcellino said Paterson's move last year helped spark the Senate to overwhelmingly approved the measure, 54-2, on Tuesday. It now is before the Assembly Ways and Means Committee, sponsored by Inez Barron (D-Brooklyn).

The bill states that if the Tax Department cannot pay a refund within 30 days because of a discrepancy in the return, the agency must provide a written notice to the taxpayer and estimate when the matter will be resolved.

If the agency fails to provide a refund or a notice of discrepancy within 30 days, the taxpayer would be eligible to receive 6 percent interest on his or her refund.