Question: Regarding the tax rebate, we also did not get the direct deposit, even though we should have based on what the tax department said. We don’t have a history of identity theft, so I don’t think it’s that. We are supposed to get $1,500 and are counting on it. Have you been able to get any more information about this?

Answer: Yes. About 19,150 Act 115 tax rebates were converted from electronic direct deposits to paper checks, and for a variety of reasons, not solely because of suspected fraud, according to the state Department of Taxation. Other readers who also met DOTAX’s general criteria to receive a direct deposit but didn’t get one wondered whether it was because they’d previously reported identity theft to DOTAX. Like you, they had filed their 2021 Hawaii income tax return electronically, received a refund on that return by direct deposit and expected to receive the Act 115 rebate the same way, as DOTAX had described. Most direct deposits were issued by Sept. 20, while checks might not be mailed until the end of October because of a shortage of paper stock on which to print them.

All qualifying 2021 Hawaii tax returns are reevaluated for potential fraud before an Act 115 rebate is issued, regardless of whether the taxpayer previously reported identity theft, said Nicki Ann Thompson, DOTAX’s taxation services administrator. “A refund may be converted from direct deposit to a paper check if there is information on a return that cannot be validated or there is information conflicting with other returns filed,” she said Wednesday in an email. In addition, “an Act 115 refund may also be converted from direct deposit to a paper check if the direct deposit is not accepted by the receiving financial institution or if a portion of the refund is offset by an outstanding debt to an external agency.”

About 19,150 Act 115 refunds were converted from direct deposits to paper checks, she said. DOTAX technicians could not break down the total by category, but examples included having multiple individual taxpayers deposit to the same account, names not matching on a tax return and bank account, or a deposit being rejected because the account has been closed since the 2021 tax season refund was deposited.

The latter could affect some taxpayers who received their 2021 tax year refunds through accounts created by their tax preparer, according to a new FAQ added to the DOTAX website. It says:

Q: “The bank account in my 2021 individual income tax return was created by my tax preparer. How will I receive my Act 115 refund?”

A: “The Act 115 refund will be deposited into the bank account specified in taxpayers’ 2021 individual income tax return. If the bank account was created by a tax preparer, please contact your tax preparer if you have any questions on how to access the Act 115 refund that will be deposited into that bank account. If the bank account has been closed by the tax preparer, you will receive your Act 115 refund via paper check.”

Act 115 rebates, which are separate from regular income tax refunds, are paid to eligible Hawaii residents who file a 2021 state income tax return by the end of this year. The rebate amount is $100 or $300 per filer and dependent, based on income and filing status. So, for example, a family of five with adjusted gross income of less than $200,000 would receive $1,500. Read more at tax.hawaii.gov/act-115-ref.

Mahalo

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