When Oregon's automated tax processing system ran across the return that produced a $2.1 million refund, the filing was red-flagged.
But when an Oregon Revenue Department employee conducted a manual review of the return, which showed earnings of $3 million, that employee approved the filing. The huge refund amount then was loaded onto a debit card per the filer's tax software instructions and sent on its way to the happy recipient.
As you've probably already guessed, the return was an alleged tax scam and Oregon's issuance of the millions as a state tax refund was a big mistake.
Lucky for Oregon, it caught its error before Salem resident Krystle Reyes, who has been charged with eight felony counts, including tax evasion, tax theft, computer crime and methamphetamine possession, spent all the money.
The 25-year-old Reyes reportedly spent around $150,000 of the erroneous refund. The state has recovered roughly $1.9 million of the tax money.
Greed backfires for filer
But the discovery of the mistake itself also is a bit of a black eye for Oregon tax officials.
State tax workers didn't realize the refund was wrong until Reyes reportedly filed a report that the tax refund debit card was lost or stolen.
Now I can understand wanting to spend $2.1 million regardless of how you got it. But really, wasn't $150,000 worth of purchases enough?
Oregon tax officials aren't talking about the allegedly fake return and improper refund it issued. That's understandable. I'd be doing my best invisible imitation, too, if I had made such a huge financial mistake.
And to the tax department's credit, it's not trying to make excuses. Although the Oregon Revenue Department, like many of its counterparts across the country, is understaffed because of budget cuts and has an old computer system, tax officials aren't shifting the blame.
Agency spokesman Derrick Gasperini said it was flat-out human error that produced the mistaken multimillion refund.
Dealing with a wrong refund
Now I know all of Bankrate's readers are honest and not trying to illegally get their hands on tax refunds to which they're not entitled. But what do you do if you do get a refund that larger than you expected? It happens now and then.
First, don't spend it until you find out from the Internal Revenue Service or your state tax office why there's a discrepancy between their records and the amount to which you thought you were entitled. You can put it in a bank account. In fact, that's a good idea. It's a safe place and if it pays any interest, you could earn a few dollars while you wait for an explanation.
The usual wrong refund, however, is the other direction: You get less than you expected. In this case you also should ask for clarification as soon as you get the questionable check. But you can go ahead and spend the lesser amount that you received.
Has your tax refund, at the state or federal level, ever been larger or smaller than you expected? How easy or difficult was it for you to reconcile the different amounts?
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