New Hawaii Law Will Prevent Future Tax Refund Delays

This Thursday, July 1, the Hawaii Department of Taxation will start doling out the remaining state tax returns. Hawaii was one of six states that delayed tax refunds this year because of astounding budget crises. New York, Kansas, Idaho, Alabama and North Carolina also had to delay state tax refunds. By delaying refunds until July, Hawaii saved $275 million in its $1.2 billion budget shortfall.

Residents who filed in January or February have already received their refunds, while taxpayers who filed later will will begin to receive their check, or deposit, on a first-filed, first-returned basis. Many might not get their refunds until well into July, or early August.

However, also this Friday, a new law goes into effect, making sure that this delay won’t happen again. Governor Linda Lingle signed into law HB 1948, requiring the Department of Taxation to provide residents state tax refunds within 90 days of when the return was filed, or the due date of the tax return, whichever date is later.

“The Legislature was concerned that using the refunds as a way to balance the budget was merely delaying our fiscal responsibility,” said Rep. Pono Chong, who introduced the bill that is now Act 171. “In addition, I think most taxpayers understand that the overpayment to the government is their money and they expect a return in a reasonable period.”

For taxpayers filing on April 15, 2011, this still means that you might not get your money until after the month of June, but at least the process will begin in a more timely manner than what we’ve seen this year.