Iowa tax refunds will be delayed again in 2018

Iowans can again expect longer wait times for state income tax returns in 2018, state officials said Monday.

During a budget hearing with Gov. Kim Reynolds, Iowa Department of Revenue Director Courtney Kay-Decker said her agency would double down on fraud prevention efforts that significantly delay the processing of income tax refunds.

"When we said we were going to slow down refunds, perhaps people didn't really believe us or they didn't know what that meant," she said. "So we've been working harder this year to make sure that we communicate we're doing that again."

Iowans were told this spring that their state tax refunds would be delayed several weeks in an effort to prevent identity theft and fraud. But a Des Moines Register analysis in June revealed another cause of the delays: The state didn't have enough cash to pay people at the same pace as in previous years.

On Monday, Kay-Decker said would-be thieves know their best chance of receiving a fraudulent refund without getting caught is by getting their returns filed early. She said best practices call for state tax administrators to "wait as long as you can to send out the refunds," ideally until tax season is over.

"I'm not suggesting that we're going to do that," she said. "I'm suggesting and letting you know that we're going to take the appropriate amount of time to make sure we've looked at the claims that have been filed and send them out correctly. That being said, we'll never be perfect."

Revenue Spokesman John Fuller said the department won't provide estimated time frames for refund processing next year "because every return is different." He told the Register that taxpayers can track their individual return status on the "Where's My Refund?" website.

"The site is updated in real-time with a taxpayer’s refund status," he said, "and has the same information that the Department’s phone agents have."

Iowa's tax administrators are sharing more information with other states to combat fraud, Kay-Decker said, as many swindlers steal over and over again across multiple states.

In addition to slowing down the refund process, the department has also worked to speed up the audit process, the director said, so taxpayers don't have to dig through tax return information years after they've filed.

The director said federal identity fraud has decreased, but those crimes have migrated down to the states. This year, through Nov. 12, the department of revenue said it stopped 10,486 erroneous refunds from being processed. Those refunds represented $17,066,368 — up from about $8 million in 2016.

"It's a little bit of a new paradigm," she said. "Our focus is on making sure to get it right the first time, which means that ... focus that we used to have on as-fast-as-we-possibly-can isn’t going to be there anymore. It's going to be a balance."