Almost 30,000 lose rebate because they owe back taxes

Nationally, by the time most of the checks had been mailed out in early August, about 223,000 payments had been diverted to states because the recipients owed back state income taxes. States have collected $85.7 million in stimulus checks for back taxes.

New York and Maryland ranked second and third, with just over 20,000 payments intercepted.

A National Conference of State Legislatures report in late July said states across the country were facing a cumulative shortfall of more than $40 billion this fiscal year. So the $85.7 million they have received so far from the stimulus checks won’t solve their fiscal problems.

Georgia isn’t necessarily number one because it has more people owing back taxes. Georgia Revenue Commissioner Bart Graham said the state may be tops simply because it is more aggressive in going after people who owe back taxes. Some states with much larger populations, such as California, have had far fewer stimulus checks intercepted for back taxes, according to federal figures.

Georgia joined a federal “offset” system about five years ago. That allows it to get all or part of federal tax refunds due to Georgians who owe back state income taxes. Using that program, Graham said the state has collected $136.6 million for back taxes through August 2008.

In all, the Department of Revenue has collected more than $400 million over the past few years from special programs aimed at getting delinquent taxpayers to pay up.

That money has come in handy at a time when the sluggish economy has brought a downturn in income and sales tax collections.

“If you look at where we would be without that ($400 million), we would be in a much more dire situation,” Gov. Sonny Perdue’s spokesman, Bert Brantley said.

Graham said 52,000 people in Georgia have liens against them because they owe back state income taxes.

Stimulus checks are not just being seized by state governments for back taxes. The Associated Press recently reported that more than 1.4 million checks have been seized by child support collection agencies.

As a result, the federal program meant to stimulate the economy has provided Georgia’s struggling state government with an $8.3 million shot in the arm. And it’s left at least 28,305 Georgians who owed back state income taxes with either no stimulus check or a partial one.

SOURCE: Atlanta Journal-Constitution (AJC.com) in an article written by JAMES SALZER