DOBSON —County residents hoping to use their federal tax refund to pay their overdue county bills could face a significant hurdle, and local tax officials want to get the word out.
During the Board of Commissioners meeting Tuesday night, Tax Director Michael Hartgrove told the board that a state program called the North Carolina Debt Set-Off Program could mean residents who pay their past-due local taxes after filing their federal return could face waits of up to three months before being reimbursed their money.
“What the program is is the program allows government agencies to submit the outstanding debt to a state clearinghouse,” he said. “We send the files of names we’re reporting who may have an outstanding EMS or property tax bill, they in turn upload it to the Department of Revenue, and if your income taxes show a refund is due, a portion of that refund is taken and applied to the outstanding debt.”
Those debts can include overdue property taxes or other outstanding bills, including money owed to state agencies.
“In a nutshell, the refund is sitting out there, and if John Doe owes outstanding property taxes it gets submitted and they’ll take the refund and apply it to those debts,” Hartgrove said.
State code doesn’t allow the program to take all refund money, but a significant percentage.
“The maximum amount that is taken is decided by the clearinghouse and is determined by multiple factors including how large a refund is owed,” said the tax director. “But it’s in the neighborhood of 25-30 percent. Very seldom do we get enough money to cover the entire property tax bill.”
And residents who pay their property tax bill but have already been submitted to the clearinghouse can wait months before the money is returned.
“Say in January we submit a file to the clearinghouse with the name of a resident who comes in and pays their bill,” Hartgrove said. “It takes three to four weeks to get to the Department of Revenue and meanwhile they pay their bill in early February.
“Before we can get them cleared through the system, which doesn’t update except every three to four weeks, they’re still in the system showing a debt is owed.
“The system will see the debt, take the percentage of the refund right there and then and submit a letter to the taxpayer.”
The tax director said nearly 100 residents found themselves in such a situation last year.
“We have a lot of people who come in and say they’ve paid their debt but have been offset anyway,” he said. “It’s causing problems due to the time gap between the offset and getting the information of payment to the Department of Revenue and could delay the full refund payment by two to three months.”
Hartgrove said this year, taxpayers can submit a request for the money owed them in writing at his office to try to expedite the process.
“If they ask for the money being offset in writing, we’ll try to get them their money a little faster, but there will still be some delay,” he said, noting that he realizes many residents depend on their refund checks.
“It’s a procedural thing,” he added. “The main problem for us, and the taxpayer, is the time delay in the process.”
Reach Keith Strange at email@example.com or 719-1929.