Do you expect a refund on your state income taxes this year? You are going to have to wait for it.
On its website, the state Division of Taxation said early tax filers may experience a “slight delay” in receiving a refund, a result of the state using additional tools to guard against refund fraud and identity theft. Refunds for 2016 will be issued starting March 1, the division said.
Returns filed electronically may take at least four weeks to process. Paper returns may take a minimum of 12 weeks to process, the state said.
The battle against fraud also was cited by the Internal Revenue Service, which said it will hold refunds until Feb. 15 for those who claim the Earned Income Tax Credit.
“Anti-fraud initiatives have to be revised every year, because perpetrators are becoming more adept at refund fraud, a crime that costs the federal government billions of dollars each year,” said Will Rijksen, a spokesman for the state Treasury Department, in a statement.
The federal government, as well as state and local governments, including New Jersey, are collaborating on efforts to fight ID theft and tax fraud, he said.
“To take full advantage of that collaboration, New Jersey needs to coordinate deadlines for data sharing,” Rijksen said. “The later start will allow New Jersey to receive and share more data with other government tax agencies and is consistent with the refund start for other states.”
The state’s decision has attracted some criticism.
“We are very concerned about this,” said Ann Vardeman, program director at New Jersey Citizen Action, which opened a free tax preparation center in Newark on Monday for families earning less than $54,000. The refund delays, especially for people who file for the Earned Income Tax Credit, will adversely affect low and moderate income residents, she said.
In the past, it would take about two weeks for people who filed their state return electronically to receive their refund, she said. “It is longer than necessary,” she said of the delay. “And we are just deeply disappointed in the whole thing.”
She worried that it may force people who rely on the money to obtain a tax refund loan to cover them until their refund comes through. Those loans will require them to pay interest. “People are losing some of that very important income,” Vardeman said.
Jon Whiten, vice president at research group New Jersey Policy Perspective, said it’s important to combat fraud, but the delay may go too far.
“We do think that this might be a bit of a dramatic and, quite frankly, a draconian measure for families that are really reliant on getting these tax refunds and who are thinking that they would get them at the normal time,” Whiten said.
“If you are an EITC (earned income tax credit) family in New Jersey and maybe you were going to use that refund this year to fix your car or get a new refrigerator because yours wasn’t really working, you are not going to be able to do that stuff, at least exactly when you expected,” he said. “It feels like a little bit of a slap in the face to make people wait so long.”