If we gave out an award for the Word of the Year in 2017, it would have to be, “security.” It’s fair to say the last couple of years have been monumental in changing how Americans view the act of filing their income taxes. And it’s all been driven by security.
Last filing season, in 2017, it was remarkable to note the number of states that extended their times to process an individual income tax return; this year, many more have joined that effort. We expect next year, 2019, will have only a handful of states that don’t extend processing times as a matter of course.
This is all done to give state tax agencies a bigger window of time to sort the legitimate income tax returns from the fraudulent. This season, we’re also seeing more warnings to first-time income tax filers that their returns, whether e-filed or paper-filed, will be delayed while their information is verified.
If states get a return from a taxpayer they haven’t seen before, many will be sending out letters in order to verify that taxpayer’s identity.
In last year’s survey, we found some 17 states warning taxpayers that their refunds might take longer to receive due to processing and security measures. This year, that figure has grown to 26 states. A state makes our list by posting some sort of caution to taxpayers on their Department of Revenue website that the state will delay refunds due to security or fraud-preventive measures.
Not all states give a definite timeframe for pushing out a refund. Some, in fact, deliberately avoid using any definite time periods at all, saying, in effect, “Your mileage may vary.”
All kidding aside, the fight against identity theft and income tax fraud is a serious one, and the states have upped their game. Working with the IRS and the Security Summit partners, state DORs are all-in when it comes to protecting their citizens from cybercriminals. Security is the new normal.
Alabama – The Alabama Department of Revenue will begin releasing 2017 income tax refunds on March 1, using the time to verify and process the early returns.
Colorado – Taking the open-ended approach, Colorado’s Department of Revenue simply says processing a perfect legitimate return could take up to 60 days after it’s filed. If there are problems with the return, it will take longer. Their website puts it this way:
“While efforts to detect fraud cause refund processing to slow down, the Department is asking taxpayers for patience because it is better to be sure a refund is going to the correct party and not to data thieves who stand to benefit from stolen refunds.”
Connecticut – Expect electronic returns to take 3-4 weeks to process; paper returns may take 10-12 weeks.
Delaware – Refunds won’t be issued until after Monday, February 19.
Georgia – Allow 90 business days to process and issue refunds. First-time Georgia filers – or those who have not filed in the past five years – can only receive a paper check.
Hawaii – Refunds should generally be available 9-10 weeks after the return is mailed or e-filed. If a paper check is requested, add another two weeks to processing time.
Iowa – No specific timeframe mentioned on the DOR website, but their warning lets us know that patience is a virtue:
“Every return we receive is different, so processing times will vary. Iowa tax returns are thoroughly reviewed for accuracy to ensure refunds go to the right taxpayer in the correct amount - and stay out of the hands of criminals. This includes a combination of automated and manual reviews - and is different for each return.”
Idaho – E-filed returns are generally processed 7-8 weeks after the state acknowledges the return. First-time filers should wait an additional three weeks before searching the State Tax Commission website for their refund payment. Paper-filed returns will take 10-11 weeks to process.
Illinois – No specific timeframe mentioned online, but the Illinois Department of Revenue tells taxpayers straight up to expect refunds to take longer than in previous years due to anti-identity theft and anti-fraud measures.
Indiana – Indiana also steers clear of specifics, saying only that they’re working as hard as they can to get refunds out while screening for fraud at the same time.
Kentucky – The KYDOR gives a general caution to filers, saying their anti-fraud measures take more time to complete and refunds may take longer to receive than in the past. If a taxpayer’s information (address, bank account number, etc.) has changed since last filing season, the return will be delayed while the new information is verified.
Louisiana – E-filed returns may take up to 60 days to process due to security measures. Paper-filed returns will take 12-14 weeks.
Massachusetts – The Massachusetts Department of Revenue set up a new process within its MassTaxConnect website, to help taxpayers verify their identity when e-filing. Taxpayers have to call or go online to sign up before a return can be e-filed:
“When a return is filed using your Social Security number, you will be asked for confirmation before a refund is issued. Confirmation is generally done by answering a few questions online. Once confirmed, your return is processed and any related refund is issued. Signing up now is strongly encouraged. Tax refund thieves file early to get ahead of legitimate taxpayers.”
Minnesota – No doubt about it, your Minnesota refund is going to be later:
“With the increase in scams and stolen personal information, the department is taking the time necessary to make sure the right refund goes to the right taxpayer. Each tax return is different and the department reviews every return to verify the information on the return. In this environment of identity theft and fraud, no return can be considered simple. The length of time to process a return can differ from year to year.”
Montana – Returns may take up to 90 days to complete processing and issue a refund – longer if the taxpayer is a first-time filer. The state also warns taxpayers their identity may have to be verified before refunds go out.
Mississippi – In general, refunds processed about 10 weeks after the complete return is received. Early returns are processed more quickly; those e-filed close to the April deadline will take longer.
North Carolina – In a perfect world, the NCDOR says it can process an individual e-filed income tax return in about eight weeks (12 weeks for paper returns). But fraud protection measures can extend those times.
New Jersey – At a minimum, New Jersey estimates that electronic returns will take four weeks to process and paper returns 12 weeks. A caution about sloppy paperwork: if any return requires manual processing, a refund could be delayed an additional 12 weeks or more.
New Mexico – The Taxation and Revenue Department generally processes e-filed returns that claim refunds within six to eight weeks. Paper returns take 8- 12 weeks.
Rhode Island – While open-ended, we like Rhode Island’s appeal for taxpayer patience:
“The Rhode Island Division of Taxation asks your patience as Rhode Island and many other states implement enhanced efforts to safeguard taxpayer dollars, combat tax refund fraud, and protect your personal information. The Division this filing season will take the time necessary to review and verify the information on all tax returns to make sure that the right refund goes to the right person.”
South Carolina – Generally, e-filed returns are processed with three to four weeks.
Utah – If the State Tax Commission can’t verify a taxpayer’s Form W-2 included in a return, the taxpayer’s refund won’t be issued until after March 1. Due to anti-fraud measures, allow 120 days from the date the return was e-filed – or March 1, whichever is later.
Vermont – The Green Mountain State hangs tough: “As long as fraudsters continue to steal identities and money through new and creative means, the department will continue its vigilance to detect and stop identity theft and tax refund fraud. This may delay some refunds. If the department sends a taxpayer a letter requesting verification of a return or more information, including supporting documents, a prompt response will help to avoid further delay.”
Virginia – A general warning that new protections take extra time, so don’t be surprised if that VA return takes longer to process.
West Virginia – West Virginia’s State Tax Department says individual returns could take up to eight weeks to process, but security measures might take longer. “Significantly” longer.
Wisconsin – While Wisconsin returns are generally processed in less than three weeks, anti-fraud measures such as identity verification could delay any return as much as 12 weeks.
We should remind that just because we did not find any mention of delays in refunds on a state department of revenue’s website doesn’t mean they’re not using additional security on its taxpayers’ returns. It just means they’re not saying much about it publicly.
As we mentioned, security is the new normal. Like it or not, as tax preparers or as taxpayers, we all need to get used to a different filing schedule. As the identity thieves and income tax fraudsters vary their tactics going forward, so will the taxing agencies.
And that’s a good thing for all of us.