50,000 New York taxpayers screwed by ‘typo’ that led to reduced refunds

They’re getting a poor return on their precious time investment.

A mere typo in a tax document has threatened the refunds of more than 50,000 taxpayers in New York, leading to some receiving smaller payouts than anticipated, while others were sent notices asking for additional payments.

The error has since been corrected, officials said, but not everyone has collected their full refund yet.

The blunder emerged early in March when the state’s Department of Taxation and Finance (DTF) issued a notice to tax professionals regarding New York residents who are married and filing taxes jointly or filed as a qualified surviving spouse, Times Union reported.

Reduced refunds came from a typo in one of the withholding tables included in the submitted tax forms.

According to the department, the typo was spotted in the third week of February and was fixed around the start of March. Those who have yet to file will not be affected by the error.

The issue affected around 52,000 people in the state of New York, which is less than 1% of all people who are expected to file returns this tax season.

As of April 1, nearly 6 million residents have already submitted their tax returns. The state has around 11 million people expected to submit tax returns as either full-time or part-time residents.

Those with an adjusted gross income between $107,650 and $161,550 were affected by the typo, and they were informed that they would get a refund lower than what they were owed. In some cases, these people got a bill that claimed additional income tax was owed.

A tax preparer from Albany anonymously told the Times Union that his firm had six clients contact him about the error. He also said the amounts often amounted to less than $100, but the lack of transparency from the DTF was frustrating.

“When you have these issues come up in your returns, you lose credibility with your clients,” the person said.

“The people (at the tax department) are usually super helpful and awesome, but somebody at the top should have put out some communications.”

The department said that the monetary amount withheld was a “fraction of 1% of all funds,” though they declined to give an exact number.

Taxpayers don’t have to do anything on their end about the error. The DTF will automatically reprocess the refunds.

“The Department of Taxation and Finance (DTF) discovered an error in the tax computation that impacted a select number of returns,” the notice said.

“Affected returns will be reprocessed automatically by DTF, and corrected notices, including additional refund amounts, if applicable, will be sent directly to impacted taxpayers. No taxpayer action is necessary.”

Refunds were issued after the error was detected, but the department said that some may not have received them yet as returns continue to be examined.