California idea: Buy a tax IOU from a friend, send it in as tax payment, page 1

reply to post by theresult

Let's see if I can explain this:

If the State of California recieves your tax return, processes it, determines that you overpaid your taxes and are thus due a refund, it has 45 days to authorize the State Controllers Office to issue a refund of the amount that you overpaid.

The State Controller's Office then prints a check and sends it to you (by third class mail, which allows the US postal Service up to 25 working days to deliver it to you). Third Class mail is slow enough to give new meaning to the term "Snail Mail", but saves the State huge amounts in postage.

Direct deposit refunds, because they are eletronically transmitted, can hit you bank account much faster, but the same maximum time limit basically still applies.

If a refund is not authorized within 45 days of the determination that an overpayment exists, the State is required to pay interest on the refund amount.

Why do you think that the delay period emplaced by the State Controller's Office is 30 days, not 45, or 60 or 90? The State does not want to pay you any more interest than it absolutely has to, but it does want to hold on to your money for as long as it possibly can to help it with the current fiscal crisis it faces.

However, if a refund cannot be authorized, say because the return cannot be processed or verified for some reason (it's incomplete,there are too many errors, etc.), then the 45 day time-frame does not apply.

Now here's the kicker:

The State has up to One Year to process a tax return!

That means that, if it wanted to, the State could, legally, delay the start of the "45 day count-down" for up to one full year!

Why would the State do that?

Well, if the budget crisis is worse than we've been lead to believe, or if it becomes worse, the State might just find it convenient to process only those tax returns which show a balance due or no refund. Thus, the State would be able to maximize its revenues while delaying some of its expenses.

I doubt that such an extreme action would ever actually come to pass; it would require, at least, an emergency directive from the Board of Equalization (which oversees the State's tax board), if not the Governor himself.

Of course, I never thought I'd see the day that we'd see refunds being delayed as a result of the State not having enough money, either.

[edit on 9-2-2009 by Bhadhidar]