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Delayed state tax refunds in Illinois, Louisiana & Utah because of tougher tax identity theft procedures

The 43 states that collect some type of income tax from their residents plan to follow the Internal Revenue Service schedule and start their 2016 tax-filing seasons on Jan. 19.

But when it comes to refunds associated with 2015 filings, the federal and some state calendars diverge dramatically.

The IRS, so far, is sticking with its hope prediction that it will issue more than 90 percent of refunds this year within at least 21 days after it receives the electronically filed returns.

Illinois, Louisiana and Utah officials, however, are saying not so fast. They have alerted their taxpayers that in some cases it could be months before they get their state tax refunds.

Struggle for money_tax refundIt will be a struggle for some filers to get their state tax refunds early this filing season.

The reason for the delays, according to the various state tax departments, is enhanced efforts to stop tax identity theft and associated fraudulent refund claims.

Illinois targets March deliveries: The Illinois Department of Revenue announced on Jan. 4 that it "does not anticipate releasing Individual Income Tax refunds for the 2016 tax filing season until March 1, 2016."

While the delay will distress those filers awaiting state tax refund money, Illinois officials say their efforts are paying off. Last year the Illinois tax office stopped nearly $5 million that criminals tried to claim by false filings.

"Our new security protocols proved very beneficial in detecting and stopping fraudulently filed returns last year, and we are continuing to enhance our fraud detection efforts this year," said Connie Beard, director of the Department of Revenue. "By delaying tax refunds by just a few weeks, we'll be able to better detect attempts at identity theft and ensure taxpayer refunds do not fall needlessly into the hands of criminals."

Illinois taxpayers can go ahead and get their filing task out of the. The tax department says that for returns that are e-filed before March 1, it expects to issue refunds within two to three weeks after that month's start date. If you file, again electronically, after March 1, state tax officials say you should get your refund within two to three weeks from the date your return was submitted.

Utah's mandated March 1 deadline: The Utah Tax Commission says that a new state law could push some of its return processing and associated tax refunds into March, too.

Since most tax crooks make off with fake refunds before the real taxpayer victims get a chance to file their returns, the state has implemented a stricter tax data matching system. Basically, the Tax Commission now must electronically compare a filer's income tax return with the employer's withholding reports.

To facilitate this matching, employers are required each year to electronically file their Utah annual withholding reconciliation forms and associated W-2 and 1099R forms by Jan. 31. If they don't, they'll face financial penalties.

But it's taxpayers who also could be penalized if employers are slow in meeting the deadline.

Even if you, the legitimate taxpayer, files a state tax return, the new law prohibits the Tax Commission from issuing you your refund before March 1 if your employer did not electronically file the business' related tax data by Jan. 31.

Louisiana expects 60-day delay: The situation is the same in Louisiana, where the Pelican State's tax department says that over the past two years, its anti-tax fraud efforts have saved taxpayers more than $38 million and led to the arrests of more than 50 individuals accused of tax ID theft related crimes.

Louisiana officials plan to keep that up in 2016. 

The Department of Revenue's enhanced security measures mean it will take additional time, specifically up to 60 days, to process refunds this filing season. During that time, the state tax department says it will use "all available technology and resources" to thoroughly review suspicious tax returns.

The two-month delay applies to e-filed returns. Taxpayers who send in paper returns should expect to wait 12 to 14 weeks for their refunds.

More states to delay refunds? These three states could be the start of a trend that started in 2015 and is picking up steam this filing season.

Last year, several states halted tax return processing because of tax ID theft and refund fraud worries.

"We saw quite a bit of testing the [state refund delay] waters last year, and we know there are a number of states that are just waiting for a few others to go first," Verenda Smith of the Federation of Tax Administrators told Politico.

This year, in addition to the three states that have made official delayed refund announcements, Wisconsin reportedly has warned its taxpayers that refunds could be late because of fraud protections. The Badger State has not set any dates, saying instead it will examine suspicious returns on a case-by-case basis.

Adjust your state withholding: So, state taxpayers depending on a refund, budget accordingly even if you're not in Illinois, Louisiana or Utah. Filers nationwide could find their refunds arriving later than usual this year.

And if you typically use your federal and state refunds as forced savings accounts, you might want to rethink that strategy.

Tax fraud is not going away any time soon, meaning this trend of closer scrutiny at state and federal tax return processing levels also will continue for a while, like into future tax years. And that means that late-issued refunds will become the norm.

To avoid that situation, consider adjusting your payroll withholding so that you'll have that money in hand throughout the year, rather than waiting -- and waiting and waiting -- to get it back after you file the next year.

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Comments

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Lameisha

I filed in January and haven't received anything yet the 60 days been over and i checked the website and it just keep saying it's been received but processing hasn't been completed what's the problem Louisiana why we cant get what's owed to us

Kyra

Yes this is ridiculous. Wait wait wait. Need my funds. I have all my information valid. No fraud here an I just get this automated system that tells me nothing. I received my federal refund but the state is taking forever. All this technology an still nuthin. Angry tax payer

Mary

Ridiculous, and simply an excuse to draw interest for a longer period of time. Federal and State returns were accepted on Feb. 7th, received federal refund within 2 weeks, still nothing from the state. It does not take 60 days to process a refund. We don't even get large refunds, our goal is to pay what we are required to pay during the year and try to break even. But when we are due a refund of money they have had the liberty of using interest free, we expect it in a timely manner.

john

I filed electronic louisiana on January 21. Haven't seen a penny. Needless to say the automated system doesn't work.

C B T

Filed my taxes on Feb 1, still nothing. The longer they keep your money the more interest they can compile.

Ricky

It is ridiculous that anyone in Louisiana should have to wait this long for a return. Filed federal and state on February 12, and received federal refund in less than 2 weeks. Just an opinion, but the longer the state holds our millions of dollars in refunds, the more interest the state earns on our money. Maybe we should rally our legislators that the state pay us interest on our refunds from January 1 until refund is issued at a greater interest rate than the state receives and they won't withhold the refunds so long. The story they tell about security measures and ID fraud should have been implemented and updated to handle business properly. If our taxes are not paid on time, we are charged interest and penalties. The government should live by the same rules as the people that are taxed.

Madasheck

You can always count on Louisiana to screw up around. Born and raised here but it sucks!!! If u owe them then they want their money yesterday, if they owe u, screw you, you'll get it when we send it.

Neki

This is sad that people have to wait 60 days to get a state refund. I filed in February and here it is almost the end of March and still haven't received mines. I filed electronically, so why do I have to wait so long for something I worked hard for? I sometimes hate that I moved back to Louisiana. How much longer do I have to wait for what I worked for?

Erica

I haven't received my state refund either. I helped a friend, single no dependants file online. They chose paper check and received their state and federal chk in 2 weeks at the same time. I was like what? I was just raggin him that it would be 2-3 months, no one does paper checks. Ha! Jokes on me!! Ole Louisiana, it will eventually be bitter sweet.

Noyb

I filed Jan 31st. I received my federal Feb 10th. I also elected direct deposit. Here it is March and this stupid slow ass state STILL haven't issued my money that I 've worked hard for. I know some people elected direct deposit and they received a paper check. People filed at the end of February and they have received theirs. WHAT IS THE HOLD UP? UGH! YA'LL SUCK!!!

Susan

I filed on February 6th and still don't have my refund. People I know who elected a paper check already have their money. They were supposed to wait longer but I am the one still waiting for my money.
I'm from California and have lived in Colorado and Texas , but Louisiana is the most backwards state with the most ridiculous, outdated laws I've ever experienced.
I wish every day I could get out of here.
Good luck to those of us stuck here.

Mandy

Has anyone in louisiana received yet?

Trina

I agree with Lynn...This is ridiculous that Louisiana is taking so long to issue out refunds. Its almost the end of March and I still haven't gotten mine yet...This is so sad...this is why I want to move out of this state, even though I was born and raised here...

Lynn

Louisiana is a joke.... This is just another attempt to keep the working class/lower class down.... Why is it that most of Louisiana's laws place the greatest burdens on the poor? Don't believe me? Take a look at their auto insurance rates and the insurance laws. Look at the penalties for those unable to pay traffic tickets by their court dates. These people get thrown in jail with the drug offenders and violent criminals. But when it's time to pay their citizens the wait is at least 60 days? With the hit our economy has taken from the oil crisis, our families depend on that money. Louisiana is run by crooks.

c hristy

Their is no reason for someone to file their state tax in jan and then have to wait until march to get their money unless these states dont no what thdir are doing because the federal gives out more money than them and it is not taking them 60 days to process returns so what gives what is the reason these states are taking so long for 100to200 dollar refunds is it really that difficult if so maybe they need to nire someone who works for the federal government to help them

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