Tax fraud protection efforts delay refunds in some states

Several state revenue departments have announced that taxpayers won’t receive tax refunds until at least March 1, even if they file early in the tax season.

Refunds will be delayed in an effort to protect taxpayers from refund fraud, or people filing false returns to steal taxpayer refunds. According to the South Carolina Department of Revenue, refund fraud costs the nation a reported $6 billion annually.

South Carolina and Illinois revenue departments released statements saying they won’t issue refunds until March 1. Utah passed a law prohibiting refunds before March 1 unless the employer and employee have filed all required returns and forms by Jan. 31. The North Dakota tax commissioner warned taxpayers to expect a longer processing time as well although a specific date was not given.

In South Carolina, the state revenue department says refunds for tax returns filed prior to March 1 will be issued within two to three weeks of the beginning of March. For returns filed on or after March 1, refunds are expected to be issued within two to three weeks of the date the return is received, according to a news release.

Illinois is following the same dates as South Carolina for electronic returns submitted error free.

The delay may be even longer in Hawaii. The revenue department said security safeguards may delay refunds up to 16 weeks for some taxpayers.

North Carolina taxpayers will likely get their refunds later as well because of efforts to combat fraud. The state revenue department issued a notice saying it won’t begin accepting individual, e-filed income tax returns until the week of January 25. The state did not specify an anticipated date for refunds.

As another measure to prevent fraud, Alabama taxpayers are required to include driver’s licenses information on their tax return. The Pennsylvania revenue department said in a news release that a return will not be rejected if a driver’s license is not provided but it is “an extra security measure to help make sure tax refunds reach the proper filer.”