Audit: Missouri increasingly late on income tax refunds

ST. LOUIS -- Missouri delayed paying income tax refunds last year largely because it was short on cash, state Auditor Nicole Galloway said Monday.

Galloway, a Democrat, released an audit of the state's management of taxpayer refunds despite what she called unprecedented attempts by the administration of Republican Gov. Eric Greitens to obstruct it. The governor's office called the audit a politically motivated "cheap ploy."

The state was late in issuing refunds to at least 555,000 individual taxpayers last fiscal year, according to Galloway. On nearly 155,000 of those refunds, the state was so late it paid more than $420,000 in interest.

That's up from the roughly 485,000 refunds issued past the 45-day deadline in the previous fiscal year, when Democrat Jay Nixon was still governor. Those delayed payments included 83,000 that cost the state $306,000 in interest, the audit said.

Galloway's office contrasted the recent delays to the 2008 fiscal year, when the state paid out 80 percent of refunds by mid-April. State law has required interest payments if refunds are not issued within 45 days of filing since 2015. Before that, the state had 90 days to issue refunds without owing interest.

"It is a challenge that has spanned two administrations," Galloway said at a news conference in Jefferson City. "Until the state's cash flow problems are addressed and individual taxpaying Missourians are paid first, it will continue to be a challenge."

Galloway said Greitens, who was elected in November 2016, went to "extraordinary lengths" to disrupt the audit. She cited delays in responses and communication, a refusal by administration officials to discuss the audit, and even a refusal to confirm all relevant information was provided.

"My conclusion is that the administration didn't want Missourians to know why their tax refunds were late," Galloway said.

Parker Briden, spokesman for Greitens, said in an email the administration provided "everything that the Auditor was entitled to." He called the audit "another cheap ploy from a Democrat who is desperate for headlines" and accused Galloway of ignoring the issue of late refund payments until Nixon left office.

"We're changing many flawed practices from the past, and this is one of them," Briden said.

Between fiscal years 2012 and 2015 under Nixon, the state each year owed fewer than 1,000 taxpayers interest for late refunds, according to data from Galloway's office. The amount of interest paid ranged from a low of about $10,000 in fiscal year 2013 to a high of more than $120,000 in 2014.

At one point during the 2017 tax season, the Department of Revenue had $200 million worth of refunds processed and ready to be paid, but the Office of Administration directed they be withheld to meet other spending priorities, Galloway said.

The audit also found the Department of Revenue prioritized paying larger refunds first to avoid owing higher interest.

The audit has been the source of a months-long political skirmish pitting Galloway against a conservative not-for-profit.

Kansas City-based Missouri Alliance for Freedom has claimed Galloway violated Missouri's open-records law, known as the Sunshine Law, by refusing to comply with its request for documents related to the audit. The Alliance also filed a complaint with Republican Missouri Attorney General Josh Hawley in December, alleging Galloway failed to turn over text messages from her state-issued phone.

Alliance president Kristen Blanchard Ansley said in a December statement her organization was acting as a "watchdog for the people of Missouri."

Galloway called the legal action an effort to intimidate her.

"My expectation truly is that I will continue to be attacked by the governor, his dark money groups, secret donors and the governor's law firm," Galloway said.

Associated Press writer Summer Ballentine in Jefferson City contributed to this report.