Client recently received letter concerning original 2022 state individual income tax return, where Pa acknowledges the refund that was applied or credited to 2023, and apparently are going to pay him (or apply amount to his account) interest on this overpayment applied. Original 2022 return was filed last year. I cannot recall any client receiving interest on a refund applied to succeeding year. Has anyone else seen this either in Pennsylvania or any other state? Thanks.
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I've never seen it when an overpayment is applied to next year's estimated tax.
Sue, this is what I think may have happened. If my memory serves me correctly, Pennsylvania may pay interest on the refund, if the refund is not mailed out within 75 days or the credit acknowledged within 75 days ( and apparently if there are no issues or questions). It appears based on this letter, that they are just now acknowledging the overpayment that was credited from 2022 to 2023. Since the 2022 return was filed last year, they are apparently going to issue him an interest refund check or apply it to his account. This was a large return that the client wanted to paper file, i.e. the old timer didn't want to efile. Apparently it took Pennsylvania over one year to acknowledge this overpayment credited, which they apparently did in this letter that they just received, and that's why they're getting interest, but I may be wrong.
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