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Small discrepancy holds up Va. tax refund

Thursday - 5/10/2012, 6:59am  ET

Richmond Times-Dispatch

RICHMOND, Va. - A Henrico County taxpayer was startled to get a letter from the Virginia Department of Taxation saying he overpaid his income taxes.

As an actuary, David Kupstas spends his days working with numbers, and he always does his tax returns by pen, paper and calculator. He figured the state owed him a $920 refund.

It turns out he was wrong. According to the state, he was owed $920.48.

The 48-cent discrepancy apparently was enough for the state to send him a letter about the overpayment and scuttle plans for an electronic refund.

"This is a very, very rare occurrence," said Virginia Slaughter, a spokeswoman for the state tax department.

"When a return is adjusted by pennies, we do not normally send a letter or reject the direct deposit, but perhaps due to a combination of circumstances with this account, this resulting letter was issued."

Kupstas filed his tax return on April Fools' Day. His paper check arrived last week.

The postage alone for the notification letter and paper check, at 45 cents each, would exceed the amount of the overpayment, if the communications were mailed at the first-class rate. The department uses presort postage rates, which is less than first class.

"It's not like I got ripped off or anything," Kupstas said. "Just file it under `pointless government letters.'?"

But more than that, the letter was alarming, he said. Until the matter became clear, Kupstas _ the chief actuary at Actuarial Consulting Group in Midlothian _ said he was thinking that he made a $920 error.

"I am normally very careful, so I wondered what the heck was going on. When I compared their numbers against my tax return, we had exactly the same thing, but they rounded to the nearest cent, whereas I had rounded to the nearest dollar _ per the instructions."

The incident made him wonder. "Is it possible that other people are receiving these letters and could be confused?"

Slaughter said the process is automated and there is no way to count how many letters are sent out every year letting people know they overpaid.

Slaughter said she is unable to speculate what happened to create this anomaly. Even if she had the taxpayer's account number, she would be unable to share what was found because of confidentiality laws.

"But we can assure you, it is very unusual," she said.

So far this year, the Department of Taxation has processed 2.6 million electronic returns and about 600,000 paper returns, said Joel Davison, public relations manager for the state department.

Electronically filed returns rarely have errors, so they can be processed faster than paper returns, Davison said.

"Unfortunately, paper-filed returns are a different story," he said. "They are more prone to error because they require multiple human touches."


Information from: Richmond Times-Dispatch,

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