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NYS Comptroller

THOMAS P. DiNAPOLI

Department of Taxation and Finance
Personal Income Tax Refunds
(Issued: 05/11/2016)


Purpose

The objective of our examination was to determine whether personal income tax refunds approved by the Department of Taxation and Finance (Department) for payment were appropriate and processed in accordance with applicable New York State tax laws and regulations. We examined refunds processed during the calendar year January 1, 2015 through December 31, 2015.


Background

The Department processes all New York State personal income tax returns. All returns that result in refunds are subject to audit by the State Comptroller prior to payment. We selected Department-approved refunds for examination using data analytics to identify high-risk transactions. During the period of our examination, the Department processed almost 7.5 million refunds totaling over $8.6 billion. From this population, we examined 31,978 refunds totaling almost $516.5 million for examination.


Key Findings

Of those transactions selected, we identified and returned to the Department 11,469 questionable refunds totaling about $53.3 million, as summarized in the following table:

Reason for Stopping Refunds
Number of
Refunds
Dollar Value of Refunds

Taxpayer claimed refundable credits based on incorrect information, such as fake or inflated number of dependents or understated income

7,465

$24,766,106

Tax preparer submitted returns with refundable credits based on incorrect information

1,314

4,102,937

Taxpayer had a questionable social security number

972

2,470,546

Taxpayer failed to claim correct income

727

12,721,480

Taxpayer had questionable itemized deductions

155

857,796

Taxpayer claimed incorrect wages and withholding

296

577,827

Other

540

7,810,786

Total Refunds Stopped

11,469

$53,307,478


Key Recommendations

  • Continue to pursue obtaining external data to prevent unwarranted credits.
  • Continue working with our Office to identify and implement other opportunities to help detect and prevent erroneous refunds.

For a complete copy of Report, click here.

 


Division of Contracts and Expenditures
Bernard J. McHugh, Director of State Expenditures

Phone: (518) 474-4868 Email: stexpend@osc.state.ny.us
Address: Office of the State Comptroller, Division of Contracts and Expenditures
110 State Street, 10th Floor; Albany, NY 12236