Noting that “[w]e know we aren’t going to win any popularity contests,” the South Carolina Department of Revenue has announced that it will delay issuing most tax refunds until after March 1, 2016.
The state tax agency is taking extra time this year to verify wage documents – like forms W-2 – with the Internal Revenue Service (IRS) to ensure that refunds which are issued are proper. There’s just one problem: while employers must send forms W-2 to employees by January 31 (more on due dates here), the deadline for sending those documents to IRS is much later. It’s a recipe for fraud and one that has been on IRS’ radar for a while: potential solutions range from delaying refunds to requiring employers to submit forms W-2 earlier (Congress isn’t exactly jumping on either).
The delay in receipt of tax forms means that the state will have to wait a little longer to match forms with IRS. Taxpayers filing after March 1 should expect to wait two to three weeks to receive their refund.
It’s not popular, for sure. However, Revenue spokesperson said about the delay, “We have a tax fraud pandemic. It is our obligation to make sure that refunds wind up in the right pockets.”
You can check the status of your SC refund here. The status is updated each day at noon. (Author’s note: With the exception of the refund status page, I could not access the website at sctax.org for most of the early morning.)
South Carolina joins two other states, North Dakota and Illinois, in announcing delayed tax refunds. Taxpayers in Utah will also have to wait until after March 1 for refunds but that’s not news to Utah taxpayers: the state passed a law (downloads as a pdf) which bars the issuance of tax refunds before March 1, unless the employer and the employee had filed all required forms 1099 and W-2 by January 31.
