The state has developed new and more extensive methods for screening paper and electronic tax returns, and the additional scrutiny is delaying state returns this year by about two weeks, said state Tax Director Maria Zielinski.
Tax officials said the state has refunded about $89 million less thus far to Hawaii taxpayers this year than it had by this time last year, at least partly because of the extra screening.
Zielinski said Thursday that the state hopes to clear the backlog by the end of this fiscal year, on June 30, so that taxpayers whose legitimate filings have been flagged for additional scrutiny will get their refunds promptly.
Ed Beal, returns classifying officer for the state Department of Taxation, said fraudulent returns are a huge national problem.
"This number has been increasing exponentially for years," he said. Beal estimated the cost of fraudulent filings for Hawaii tax refunds has been doubling each year.
Mallory Fujitani, spokeswoman for the Tax Department, said state tax officials cannot provide data for any year on how many fraudulent returns are detected, or the dollar value of those fake filings.
"In previous years, various areas within the department handled suspicious tax filings so we don’t have consolidated data on the number of these types of filings," Fujitani said in a written statement.
Beal said the state now has 19 "screens" it uses to filter returns to hunt for fraudulent filings, and said in some cases those extra checks and reviews might delay a refund by a month.
Zielinski said she expects most electronic returns should be processed in four to six weeks, while paper returns should be processed in six to eight weeks.
Asked why the state is seeing a dramatic increase in fraudulent filings, she replied, "I think the scammers are just getting smarter, unfortunately."
