Arikka Johnson, a resident hall director at Chaminade University, made sure to pay her Hawaii income taxes in full before the April 20 deadline, but a couple of months later received a balance-due notice from the state.
Johnson, 42, knew she had already paid the tax, but sent in the payment anyway.
"I thought perhaps it was me who had made an error," Johnson said. "I just assumed since they were the state Tax Department that they were in the right. That was my biggest mistake."
Johnson is now waiting to be refunded for the unnecessary payment she made because of the Tax Department’s error.
"Is there a plan to reimburse taxpayers who have been (affected) by the Tax Office’s blunder?" she wrote the Honolulu Star-Advertiser on July 25, the day the newspaper published an initial story about incorrect balance-due notices being sent to taxpayers. "I am curious as I paid the erroneous tax, not realizing I didn’t need to."
After the newspaper story, the Tax Department acknowledged on its website Friday that inaccurate letters had been sent to taxpayers who had submitted payment via paper check "close to the April 20 deadline."
"If you did send in a duplicate income tax payment, our system will automatically generate a refund for you," the message says. "You do not need to do anything more for the refund to be processed."
The agency said refund checks could take approximately two to three weeks to be processed. Before the posting, it was unclear how taxpayers would get reimbursed. Tax Department call center operators didn’t previously say overpayments would be automatically refunded and, in at least one case, suggested the taxpayer stop payment on the check to prevent being charged double.
The Tax Department said it will announce Monday how many incorrect bills were sent.
"Our staff is still researching the situation and we’re trying to find an accurate way of pulling the data you have asked for," Tax Department spokeswoman Mallory Fujitani wrote in an email late Thursday. "We should be able to provide you with some preliminary findings by Monday."
Candice Lusk commented in an email last week that she was uncertain what to do.
"What do those of us who paid the bill in good faith do? Will we be credited? Refunded? It’s impossible to get a hold of the department," Lusk said.
The Tax Department call center has only 10 operators to answer the more than 300,000 calls it gets per year. Last year the call center could answer only 59 percent of the incoming calls, the department said.
The erroneous balance-due notices sent to residents who had paid their taxes on time highlight ongoing problems with the Tax Department’s faulty $87.5 million computer system.
The state paid Montreal-based contractor CGI Group Inc. — the same vendor that built Hawaii’s troubled health insurance exchange — $87.5 million between 1999 and 2011 to modernize the Department of Taxation’s information technology system. It is now preparing to spend at least another $32 million to install a new system.
Fujitani earlier told the newspaper the agency realized in 2011 after assessing the "old technology" that it needed to replace the system.
But three years later a contractor still hasn’t been selected. The department’s request for bids was scheduled to close Thursday but has been postponed until the end of August. The state released a request for proposals in April after a number of delays.
"The State Procurement Office recommended extending the deadline; we deferred to their recommendation as they are the issuing agency," Fujitani said in an email.
"Since that time, the state has addressed questions that have been submitted by vendors and made addenda to the RFP (request for proposals) when appropriate."
The state spent $716,996 in fiscal 2014 on the "tax system modernization" project, including $476,154 for payroll, according to Fujitani.
The remaining money was used to pay for a combination of nonpayroll expenses, including vendors and legal counsel to assist with the drafting of the RFP, she said.
Lawmakers previously questioned Tax Department officials about the money being spent on the project given that a new contractor has yet to be selected.
The state has budgeted about $3 million for operational expenses for the "tax system modernization" project in fiscal 2015.
"This type of project requires significant preparation, and there are (tax office) employees who are working full time on assessing the department’s current operations and preparing the department for the (tax system modernization) implementation," Fujitani said.
