- The Washington Times - Saturday, August 25, 2001

Mark R. Warner, the Democratic nominee for Virginia governor, yesterday endorsed a proposal that would require the state to pay interest on all tax refunds it fails to issue within 30 days.
It would help make state government more accountable, like businesses, said Mr. Warner, a telecommunications executive. It also draws attention to the state's delayed tax refunds this year, which Democrats say Gov. James S. Gilmore III has used to pad his budget.
State finance officials said 650,000 income-tax returns had errors this year —a higher number than usual — and that has delayed refunds to many residents, because those returns have had to be processed by hand.
Mr. Warner and Delegate Clifton A. "Chip" Woodrum, Roanoke Democrat, said the delay is unacceptable. They want to force the state Department of Taxation to move faster by requiring the state to pay interest after 30 days. The law now gives the department 60 days before it must pay interest.
"The state requires taxpayers to pay their taxes on time. It therefore has a responsibility to issue refund checks on time," Mr. Warner said yesterday in a telephone news conference with Mr. Woodrum. "This is not the government's money, this is the taxpayers' money, and they have a right to get it back as quickly as possible."
Earlier this month, Mr. Gilmore announced a $52.4 million revenue shortfall, saying the shortfall was not enough to halt the repeal of the car tax. Democrats said the shortfall would have been larger if there had not been huge delays in refunding state income taxes.
Virginia Secretary of Finance John W. Forbes said the current system of paying interest on tax refunds saves the state money overall. He said any policy that would force returns to be processed in 30 days would require 492 new employees and cost $15 million.
"It comes down to a simple question of which is the best use of taxpayer dollars — to pay $1 million in interest on 10 percent of the tax returns or $15 million every year so that 10 percent of the returns can be processed 30 days sooner," he said.
Mr. Warner and Mr. Woodrum, whose proposal failed in this year's General Assembly session, said they think the new deadline would encourage the department to work more efficiently.
Mr. Warner's Republican opponent in the race for governor, Mark L. Earley, has not taken a position on the Woodrum proposal, a campaign spokesman said, but he supports reducing the number of delayed refunds by encouraging more people to file on line.
About 85 percent of returns are processed in 12 days, making Virginia a leader in turning tax returns around, finance officials said.
Twenty states allow more than 60 days before interest accrues. Virginia and four other states allow 60 days, while the federal Internal Revenue Service pays interest after 45 days, and 11 states and the District allow between 30 and 45 days.


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