Tax season ended two months ago.
For roughly 250,000 filers, they’re still waiting for their refunds.
Recommended Videos
The Michigan Department of Treasury reports roughly 95 percent of returns filed on time have been processed.
Since the filing season opened January 26, more than 5.12 million individual income tax returns have been processed and more than $3.43 billion in refunds issued with an average refund of $901.
That means about five percent of filers — an estimated 250,000 people — are still waiting for their refunds.
Previous coverage --> Waiting on a Michigan tax refund? Here’s why it may be stuck in ‘pending review’
New system, new headaches
The source of many delays traces back to November, when the Treasury retired its 40-year-old mainframe and switched to GenTax, a tax processing platform made by Fast Enterprises.
Melissa “Missy” Snyder, division administrator in the Individual Income Tax Division, says the overhaul was long overdue, but that doesn’t mean it came without growing pains.
“We came off a mainframe system that was 40 years old,” Snyder said. “When you transition from something that’s four decades old, there’s a lot that comes with it — not just the technology. There’s training, there’s learning curves, there are interfaces with other groups like IRS files that we get.”
Snyder compared the transition to upgrading from an outdated device to the latest smartphone.
“The best analogy I can give is we went from a flip phone to an iPhone 15,” she said.
Why returns are getting flagged
Treasury officials say the new system is significantly more sophisticated than its predecessor and that’s part of why so many returns are being held up.
The upgraded platform performs detailed, line-by-line evaluation of returns, flagging discrepancies the old mainframe may have missed. Missing data fields, mismatched information or math that doesn’t add up can all trigger a manual review.
“So, the delays that people are experiencing are related to either incomplete, incorrect or information that just doesn’t make sense,” Snyder said. “It might be complete on the form, but the math isn’t math-ing as we’re trying to work through the returns.”
The new system also introduced stronger fraud protections, something Snyder says was a driving reason for the upgrade.
“One of the major changes that we made with this technology update is a lot of support to prevent fraud,” she said. “We have to be conscious of people’s identities being stolen, tax preparer credentials being stolen. When the initial return doesn’t pass that eye test, if you will, we will stop and we will ask for more information.”
David Yesh, a retired Navy Reserve officer from the Detroit area, filed his Michigan return electronically on March 18. Weeks passed with no refund and no explanation.
“I filed my return and it was accepted 64 days ago,” Yesh said during a mid-May interview. “I don’t know, 30 or so days ago I called to find out where it was. Couldn’t talk to a live person, but I got a message that my return was still under review — with no explanation about what it was being under review for.”
Yesh said he was told his return would be completed by May 13. When that date came and went, the automated message remained unchanged.
“On May 13, I called, I got the same message,” he said. “May 14, I call, same message saying that my review will be completed by May 13.”
Yesh, who says he’s been filing Michigan taxes for 50 years, including three years while stationed in Japan, called the lack of communication the most frustrating part.
“If the state made an error, they need to own up to it, communicate what the problem is and what’s being done to fix it,” he said. “If it is just a problem with my return, then be able to communicate with me and let me know what error you found or what information you need to resolve that error.”
State lawmakers taking notice
Yesh isn’t alone. State Rep. Erin Byrnes, D-Dearborn, says her office has fielded complaints from roughly 15 constituents in Dearborn and Dearborn Heights who are still waiting on refunds, it’s a number she calls unprecedented.
“By the time we got to about five, the alarm bells started to ring,” Byrnes said. “Then it became 10, and then it got up to 15. We’ve been talking with other offices throughout this time period and we’re far from the only office. A lot of state reps are seeing this issue.”
Byrnes says she understands the real-world financial impact of delayed refunds.
“You’re banking on it — quite literally,” she said. “Months later, you’re still left waiting and you don’t really have any answers, and that’s not acceptable. We know that folks are being squeezed financially right now on a variety of fronts.”
Byrnes says her office has been in contact with Treasury but describes the process as challenging.
“We definitely need more communication from the Treasury Department, and we need to get a handle on this software system,” she said. “We know that other states are using the same software, and we’re trying to figure out why Michigan is struggling so much.”
27,000 erroneous letters sent
Compounding the confusion: Treasury acknowledged sending approximately 27,000 incorrect notices to taxpayers.
Snyder says the letters incorrectly suggested taxes were owed when they weren’t which stemmed from the result of a data-pull error during processing.
“The payments themselves were correct,” Snyder said. “They were accounted for on the financials, but when the letter was generated to the taxpayers, it pulled in the wrong data element. The letters themselves were wrong.”
Bob Doyle, president and CEO of the Michigan Association of CPAs, says the erroneous letters created a ripple effect for tax professionals across the state.
“There was these erroneous notices that were sent out to taxpayers,” Doyle said. “Of course, the first thing they’re going to do is call their CPA. That’s definitely how we’ve gotten involved in ensuring Treasury understands the issues.”
Doyle says the Michigan Association of CPAs has since been working closely with Treasury to address ongoing issues — and is already looking ahead.
“Meeting more regularly is what we’ve started to do,” he said. “We’re working on how we can better use language in letters that explains the situation better. We’ll continue to ensure that the next deadlines coming up are smoother for our members.”
Overloaded phone lines — repeat callers to blame?
For taxpayers trying to get answers by phone, the frustration is real. But Treasury says part of the problem is a small group of repeat callers tying up the lines.
In April, Treasury found that just 65 people accounted for 11,000 calls to its phone line — with some individuals getting through 14 or 15 times.
“When you start breaking that number down, it blocks everybody else,” Snyder said. “They’re constantly eating up a phone line.”
A new phone system is expected to go live in July, Snyder said.
In the meantime, Treasury recommends taxpayers check the status of their return through the e-service portal at michigan.gov, where they can also view any letters sent to them, send a message and request a callback.
To get to the e-service portal, click here.