Hundreds of Kansas taxpayers are still waiting to receive their 2006 state income tax refunds – averaging about $700 each – even though they submitted their returns on time and provided all necessary information.

These taxpayers all claimed tax credits that required extra verification. Tax examiners must review each return by hand to verify eligibility for the credits.

Steve Stotts, state director of taxation, said the state Department of Revenue had “probably five or six” examiners to look through the 40,000 to 50,000 returns claiming the special tax credits each year. He said it usually takes them until mid-August to send out all of the refunds owed to taxpayers.

“Our most experienced tax examiners have to look at them,” Stotts said. “Those folks are working as hard as they can to get them out.”

The state still has about 16,000 refunds to send out. He said only about 1,000 to 2,000 of those owed refunds would go to taxpayers who had provided enough information but required special tax credits review. Others required more information for the taxpayer.

The late returns are costing the state money. Taxpayers are owed 9 percent annual interest on refunds starting 60 days after the tax filing due date, which was April 17 this year.

Stotts said the two most common tax credits that required extra verification are the Business and Job Development Credit and the Business Machinery and Equipment Credit.

Randy Kahn, co-owner of Lawrence accounting firm Kahn & Associates, said several of the firm’s clients had experienced long delays on their refunds because of tax credits. But he said the refunds were not amounts of huge consequence for the clients.

“We’ve had absolutely no complaints with their staff,” Kahn said of the Department of Revenue. “It’s just unfortunate that they don’t have a few extra bodies up there available to help.”

Kahn said he’d never had any clients experience similar delays with federal tax refunds.

Maura Browning, public information officer for the Missouri Department of Revenue, said Missouri’s system for handling tax credit eligibility was structured differently than Kansas’. Though the state offers 47 different tax credit programs, a variety of different state agencies determine taxpayers’ eligibility for them, usually before tax returns are filed. Browning said few of the programs resulted in delays, and all refunds were sent out by June 30.

Len Sloup, director of operations for the Nebraska Department of Revenue, said Nebraska received far fewer tax returns requiring intensive tax credit inspection than Kansas. He said all refunds were sent out by July 15.

Stotts said Kansas’ refund delay problem could be eliminated if everyone claiming tax credits filed their returns electronically at ksrevenue.org. He said that would be a better solution than hiring more tax examiners, because it nearly eliminated problems with taxpayer errors.

He said errors occurred in 10 percent to 15 percent of paper returns, but only 1 percent of electronic returns.

“That’s really the answer to this, just to get folks to file their returns electronically,” he said. “That saves everybody tax money.”

Examiners still must inspect electronic returns claiming the special tax credits, but it takes them much less time than going through paper documents. The electronic filing system performs many calculations automatically, which means the examiners don’t have to check the taxpayers’ math.

Stotts said most of the tax credits could be claimed through the online process. Online filers also receive refunds within seven calendar days.