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April 18, 2011


DiNapoli: $13 Million in Questionable Tax Refunds Stopped

The State Comptroller's office stopped $13.3 million in questionable personal income tax refunds from being paid so far in 2011, State Comptroller Thomas P. DiNapoli announced today. DiNapoli's office audited and paid 3.6 million refunds totaling $2.9 billion. Another 1.1 million refunds totaling $1 billion is expected to be paid in the coming days.

"Tax scams can be simple when taxpayers inflate expenses or hide income to avoid paying taxes," DiNapoli said. "Other scams are sophisticated. Dishonest tax preparers cook up schemes to get bigger refunds for taxpayers and bigger fees for themselves, either with or without the taxpayer's knowledge. Whatever the scam, we need to separate the honest mistakes from the fraud and make sure only legitimate tax refunds get paid. Tax cheats cannot be tolerated."

DiNapoli's office is responsible for auditing all bills for the state prior to payment, including personal income tax refunds.

The majority of questionable refunds were filed by taxpayers who claim credits for ineligible child care or credits allowed only for low-income households. A significant number were linked to dishonest tax preparers filing false tax returns.

Questionable personal income tax refunds stopped include:

Reason for Stopping Tax Refund

Number of Refunds

Dollar Value of Refunds

Taxpayers claiming ineligible refundable credits (e.g. fake or inflated number of dependents, fictitious day care centers, or understating income)



Tax preparer submitted returns claiming ineligible refundable credits



Taxpayer failed to claim correct New York State income



Taxpayer with questionable itemized deductions



Taxpayer failed to claim correct New York City income



Taxpayers with questionable social security numbers



Various other reasons



Total questionable refunds not paid





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