An oversight in state law leaves some state taxpayers in the dark about money owed back to them
JEFFERSON CITY, Mo (Nov. 29, 2016) Missouri State Auditor Nicole Galloway says an audit of the Department of Revenue’s tax division has revealed an oversight that’s keeping Missourians in the dark about millions of dollars owed back to taxpayers each year. The problem is in a two-year tax transparency gap where refunds owed to taxpayers are only searchable online within the first year the money is due, and then removed and made available online again two years later when the money is turned over to the state’s unclaimed property rolls. This amounts to an estimated $3 million dollars in refunds that are currently due, but hidden from public view.
“Regardless of the reason a tax refund check is not cashed, whether it’s due to a move, a wrong address in the system, or lost or stolen mail, these circumstances do not change the fact that this money belongs to the taxpayer,” Auditor Galloway said. “State government should work together, at the bare minimum, to ensure taxpayers looking for past due refund amounts have a simple, easily accessible way to search for money that is rightfully theirs.”
Auditor Galloway and her team reviewed the Department of Revenue’s procedures for tax refund checks that are mailed out, but never cashed. If a check is returned as undeliverable, the information is added to the department’s Returned Refund Checks web page. After one year the check is voided and the information is removed from the website and forwarded to the State Treasurer’s Office. After three years from issue date, and if the State Treasurer’s Office is unable to find the individual, the money goes into the Unclaimed Property Database. That means for those two years between the time the check is voided at the one-year mark, and entered into the Unclaimed Property Database at the three-year mark, the records are not publicly available to anyone looking to claim their past tax refunds.
During the time of the audit, 6,000 undelivered tax refund checks totaling nearly $1.3 million were listed on the Department of Revenue’s website, and about 30,000 uncashed refunds totaling nearly $4.5 million were turned over to the State Treasurer’s Office.
The audit calls on the Department of Revenue to address this lapse and ensure the information is publicly available throughout the process, so individuals can search for and find money due back to them at any point in the process.
A complete copy of the audit report is available online here.
This push to eliminate the existing two-year “tax transparency gap” is part of an ongoing focus on increasing transparency and accountability for taxpayers in Missouri. Earlier this year Auditor Galloway launched the online Show-Me Local Government Map to promote transparency in government finances and operations. In addition, audits are underway on a series of special taxing districts in the state, including Community Improvement Districts (CIDs), Transportation Development Districts (TDDs) and Tax Increment Financing (TIF) Districts.