D.C. Officials Investigate Mistaken Income Tax Refunds to Residents

By Nikita Stewart
Washington Post Staff Writer
Thursday, July 2, 2009

The District Office of Tax and Revenue is looking into how income tax refunds were mistakenly sent to residents -- a probe that comes in the same week that a former tax office manager was sentenced to 17 1/2 years in prison for embezzling $48.1 million in phony property tax refunds.

Tax office officials say they believe the recent erroneous refunds, brought to light by D.C. Council member David A. Catania, are isolated incidents.

But Catania (I-At Large) said it's clear that control problems linger in the tax office, where, over two decades, former employee Harriette Walters pulled off the largest embezzlement in D.C. government history.

Catania's partner, Brian Kearney, received a refund for $10 even though he owed taxes. And a constituent contacted Catania after incorrectly getting a $2,886 refund.

"I don't know the scope of the problem, but something is not right," Catania said. "This is a wakeup call."

The questions: How many checks went out? And how many were cashed?

No one knows for sure, but Natalie Wilson, spokeswoman for the tax office, said the instances appear to be isolated. "These were processing errors. We have no indication that it's a widespread problem. We're still looking into it," she said. "There have been no additional calls [about unearned refunds] from taxpayers."

D.C. Council member Jack Evans (D-Ward 2), chairman of the Committee on Finance and Revenue, said he is monitoring the situation and has been in touch with Chief Financial Officer Natwar M. Gandhi.

"Am I concerned? Absolutely," Evans said.

But he added that his committee has not received any complaints about mistaken refunds. "If you get a refund check, you might just cash it," he said. "But if a thousand were sent out, I have to believe someone out there is honest."

Those somebodies might have been the two he knows, Catania suggested.

With the recession and the city's unemployment rate surpassing 10 percent, some residents might have cashed, pocketed and spent the money, he said.

"In this environment, it can be very tempting," he said.

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