Hurry up and Wait on Taxes
Businesses must pay GET earlier, but state takes longer to cash checks
For decades, the state has taken weeks on average – even months – to cash taxpayers’ checks. Now, with government-worker furloughs and restrictions on temporary hires, the check-cashing delay has gotten worse.
What makes many business owners especially angry about the delays is a new law, which took effect this year. The law forced them to rush to pay their monthly excise tax payments by the 20th of the following month, instead of the end of the month. The point of the law was to reduce the state’s cash-flow crisis.
From July through September, the first quarter of the state’s fiscal year, the state took an average of more than two weeks to cash checks, says taxation services administrator Joan Bolte, who oversees the check processing. She says that’s about double the average time it took last year.
But many people who write tax checks say it takes much longer on average than that to deposit their checks. Kaneohe CPA Ted Talbot says it takes four to six weeks for his general excise tax payments to clear; other businesspeople cite similar month-or-more delays.
Lowell Kalapa, head of the Tax Foundation of Hawaii, says he put a check into a drop-box at the Tax Department’s Punchbowl Street offices on July 20.
It finally showed up at his bank a month later. That’s opposed to a property tax payment he made to the City and County of Honolulu that was cashed in two days.
For comparison purposes, Hawaii Business looked for a big local company that processes a lot of checks; Servco Pacific says that its automotive division deposits checks it receives on the next business day.
Kalapa says that a state government short on cash needs to speed up its process. “Someone should be sitting over there and saying, ‘How can we get this money into the bank faster?’ ”
Tax administrator Bolte cites several factors for the slowdown in check cashing:
• A backlog builds up on the twice-a-month furlough days for state workers. “The biggest issue for us is the furloughs,” says Bolte. “The work doesn’t go away.”
• A reduction in 89-day temporary employees who helped during busy periods; and
• A crackdown on people who don’t file GET returns, which resulted in more filings.
Bolte oversees workers who open tax returns, make sure checks are attached, scan tax forms and then post checks.
The system sounds simple, Bolte says, but processing can be complicated by people filing late returns, writing checks for incorrect amounts, not including checks, or mailing returns and checks separately. Processing slows around the end of January and July when semiannual filers join monthly and quarterly filers in submitting GET payments.
CPA Talbot says furloughing these workers is a huge mistake. “Furloughing
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