NYC refunds $800 million in corporate taxes

December 1, 2008

All those shell-shocked Wall Street guys aren't the only Big Apple residents taking major hits because of the financial crisis.NYC_Big_Apple

The City of New York has been forced to refund more than $800 million to companies that overpaid their taxes this year. The excessive tax payments, reports the New York Times, were based on expectations of a more robust business performance.

New York businesses each year estimate their tax liabilities based primarily on how well they did in prior years. The first half of 2007 was quite lucrative for many financial firms and other companies, says the Times, leading them to prepay millions more in taxes than is the actual case in light of 2008's end-of-year revenues collapses.

The paybacks, according to the paper, are three times the typical refund amount. And some experts say the refunds will continue to grow over the next few months. That means the city now faces the possibility of slashing services and raising taxes.

A similar situation is also happening with state taxes. New York State paid out $1 billion in corporate refunds during the first 10 months of 2008, reports the Times, in contrast to the $581 million it paid out during the same period in 2007.

Pay after it's earned: Such business tax
collections might be commonplace nationwide and might have worked just
fine for years, but it seems to me a bad method.

Sure, it gets money
into state and local treasuries in advance, but it also forces the tax
departments to administer continual refund operations, although usually not at
this year's level.  Maybe that's more efficient and cost-effective than
collection efforts, but they've got those, too, anyway.

And as a business owner, I'd really hate it if year after year I was overpaying my taxes. Many companies can't afford to have a chunk of cash being held unnecessarily by anyone, but particularly not by the tax man.

I don't know about NY firms, but I always expect my revenues in the next year to be lower. Maybe I'm just a pessimist; I think I'm more a pragmatist. One year's good income is great and if it continues, all the better, but I don't count on it. I keep working to make that happen and am pleasantly surprised when my good business fortune continues, and grows, from year to year.

And then I'll share my success with the tax collectors, when it actually happens!

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Tax Season 2026 Continues!

We made it. Tax Day 2025 is finally over. For most of us. When the filing season started on Jan. 26, millions who were expecting refunds filed immediately. Most of us got our returns to the Internal Revenue Service by April 15. But plenty of taxpayers also got extensions. They are looking at an Oct. 15 filing deadline.

Those procrastinating filers aren’t a problem. In fact, the IRS appreciates taxpayers who take time to fill out their 1040 forms correctly. It also is grateful that tax submissions are spread out a bit, especially now that the IRS is a leaner agency. Processing returns is easier when they arrive throughout the year instead of in massive bunches.

But enough about Uncle Sam’s tax collection issues. The focus now is on all y’all who filed for extensions, giving you another six months to complete your return. Since your new mid-October due date will be here before you know it, let’s get started now on meeting it.

The ol’ blog is here to help you finish up your extended Form 1040. You can start with January’s tax tips page, which has links to the rest of the year’s tips by-month collections. You also can peruse various tax categories for more tailored advice by clicking on the More Tax Posts drop-down menu at the top of this (and every) page.

And to make sure you don’t miss your new filing deadline, the count-down clock below will let you know just how much time you to file by Oct. 15. At the latest.e. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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