R.I. tax administrator: Tax refunds return to pre-pandemic rates
Neena Savage, Rhode Island’s tax administrator, addressed state budget analysts during a State House hearing on Thursday, May 4, 2023. (Screenshot)
Pandemic-driven fraud, filing deadline extensions and staffing shortages turned the state tax return process upside down. Now, it’s righting itself.
The 413,000 tax refunds issued by the Rhode Island Division of Taxation as of May 1 mark a return to levels not reached since 2019, when the state had issued 415,000 refunds by that same time, Neena Savage, state tax administrator, said Thursday.
“We are getting back to normal operationally in terms of the tax season,” Savage said, speaking to state budget analysts as part of the ongoing state Revenue and Caseload Estimating Conference.
Indeed, the process has been anything but “normal” since the pandemic hit. Federal tax return deadline extensions – adopted for state returns in Rhode Island – gave taxpayers extra time to file their returns in 2020 and 2021, slowing down the process.
At the same time, a rise in fraud – including fake unemployment claims filed with the R.I. Department of Labor and Training and a data breach by the Rhode Island Public Transit Authority – forced the state taxation division to more closely scrutinize tax returns, Savage said.
Tax administrators flagged more than 44,000 returns (totaling nearly $38.6 million) as potentially fraudulent as of May 1, 2022, according to state tax data. By comparison, just over 29,000 returns (worth $29.5 million) have been flagged for potential fraud as of May 1 this year.
The $284.3 million in tax refunds paid out this year represents a nine-year high, according to state data, reflecting an increase in the average refund amount, according to Savage.In 2019, the state had issued $244.7 million worth of refunds as of May 1.
Meanwhile, the Division of Taxation has been working on improving operational efficiency and filling staffing shortages that made it difficult to process tax returns quickly.
That includes the addition of a new Taxpayer Experience Office and five new taxpayer assistance representatives to focus on ways to help taxpayers through internal program changes and external outreach.
Finding revenue officers and auditors remains a challenge, Savage said.
The demand on the agency employees has also been reduced thanks to a new law that required businesses with over $100,000 in gross income to file their quarterly taxes electronically as of Jan. 1.
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