JEFFERSON CITY — Missouri residents might get their state tax refunds faster under a bill endorsed Tuesday by the House.
State officials currently can hold onto tax refunds for up to 120 days without paying interest. Legislation given first-round approval in the House would limit that to 45 days. The shorter period would take effect immediately when it is signed into law.
The 45-day clock would start on April 15 unless someone is late filing their taxes, and then it would start when the tax return is postmarked. The state's deadline would apply to refunds for sales taxes and personal and corporate income taxes.
Last year, Missouri delayed tax refunds to boost cash reserves. Kansas, California and North Carolina also delayed tax refund checks last year because of cash-flow problems. Missouri officials eventually used $250 million of federal economic stimulus money to speed refunds.
The bill's supporters said the state should not keep tax refunds any longer than is necessary for processing.
According to the state Department of Revenue, tax refunds so far are ahead of last year's pace. Through March 1 the state had issued 726,080 refunds for a total of $281 million. Last year, 714,926 refunds totaling $264 million had been issued.
But Missouri is facing financial problems again this year that have prompted spending cuts from the current budget. Gov. Jay Nixon and legislative budget leaders met Tuesday because state revenues have declined more than was expected in January.
Rep. Jason Smith, who handled the tax bill during House floor debate, said he believes the state should pay all its debts on time — including those owed for collecting too much tax.
"This is not the state's money," said Smith, R-Salem. "This is the taxpayer's money, and we shouldn't be holding onto it."
Legislative staff predicated in a cost estimate that shortening the deadlines could force the state to spend more than $100,000 per year. The Department of Revenue estimated that the state could be required to pay several million dollars in interest and that processing tax refunds quicker could cost several million dollars more to hire the necessary extra employees.