Youngkin’s finance secretary reveals ‘personnel changes’ were made after corporate tax refund backlog

RICHMOND, Va. (WRIC) – The last question Virginia’s finance secretary answered Wednesday after presenting the commonwealth’s last fiscal year’s revenues and economic outlook to the legislature’s money committees had to do with a backlog of corporate tax refunds.

It came from a surprising source who’s not on either of the committees: Virginia’s Republican Lt. Gov. Winsome Earle-Sears.

“That’s not supposed to happen, is it?” Secretary of Finance Stephen Cummings joked when House Appropriations Committee Chairman Luke E. Torian (D-Prince William) said Earle-Sears had a question for him on the presentation .

Cummings had already taken several questions from senators and delegates on the Virginia Senate and House’s money committees on an array of issues, from the potential for more tax cuts to public education funding.

Pointing to a footnote on one of the presentation’s slides that disclosed the corporate tax refunds backlog, Earle-Sears asked Cummings why there was one.

“Yes, we had a problem within Tax [the Department of Taxation] and it’s frustrating,” Cummings acknowledged. “I think we’re all frustrated by it.”

Cummings explained that resources were shifted to prioritize processing one-time tax rebates in 2022 and 2023, which he described as “crunch time,” and a team took the focus off corporate refunds.

He said it happened more than once and in more than one cycle and wasn’t shared with the tax department’s previous and current commissioner.

“When it became clear that this was happening, where it was frankly just pushed aside, it did lead to a much higher level of corporate income tax collections, which as you might remember, beginning of this past year we were showing huge increases in corporate taxes because our refunds were understated,” Cummings said.

The issue, Cummings explained, was identified by Virginia’s new tax commissioner and led to “some personnel changes.” He added that it was “not acceptable execution” by the team and that he shouldn’t have skipped over the backlog in his presentation.

Earle-Sears, who has said she’s exploring a run for governor next year, raised concerns that it potentially impacted the bottom lines for businesses, including small businesses, in Virginia.

“If I wanted to buy another truck, that’s a problem because I had the money, but I didn’t have the money because the government still held onto my refund,” she said Wednesday.

When Earle-Sears asked Cummings whether it was a “software issue,” he said it was “more of an execution problem” on behalf of the team responsible.

“This backlog is largely clear so we’re back now where we have a clear set of numbers on this, and I can promise you that won’t happen again,” Cummings told the committees.

Youngkin’s press secretary, Christian Martinez, told 8News the backlog issues have been resolved and won’t influence Virginia’s projections in the future.

“When our new tax commissioner joined the administration, he promptly identified and addressed the processing error affecting corporate refunds,” Martinez said in a statement. “Due to his swift action, all corporate backlog issues have now been resolved, and will not affect our projections going forward.”

Martinez referred 8News to Virginia’s Department of Taxation on whether employees were fired as a result of the backlog, but an agency spokesperson said they could not comment on the personnel changes.

“We have now returned to normal processing timelines for corporate returns and are monitoring those daily to ensure this issue doesn’t recur,” Heather L. S. Cooper, a spokesperson for Virginia’s tax department, wrote in an email. “We are not able to comment on personnel issues.”

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