State Board Stops CSUN Tax Refund Diversions


The state Franchise Tax Board has stopped diverting income tax refunds belonging to Cal State Northridge students after school officials acknowledged they submitted the names of hundreds of students who owed the campus nothing, a state official said Monday.

Franchise Tax Board spokesman Jim Sheppard said CSUN’s list of nearly 7,000 student names has been pulled from the system that allows public agencies, such as CSUN, to collect debts by taking income tax refunds from those who owe.

CSUN officials acknowledge they mistakenly took nearly $70,000 in 1996 income tax refunds that were owed to more than 700 students. Those students had no campus debts, and the refunds have since been returned.


“It was a human error,” said CSUN spokesman Bruce Erickson. “We regret it and apologize to the students. It is a mistake and we are sorry for it.”

Erickson said the school believes a computer programmer mistakenly put hundreds of names on the debtors list. CSUN sent the state the names of 7,000 students who allegedly owed a total of $3.2 million.

The board is authorized to divert state income tax refunds and California State Lottery winnings from residents who owe money to public agencies. Last year, the board diverted $44 million in income tax refunds from taxpayers owing money to about 170 such agencies.

Although the campus was first made aware of the problem in late January or early February, no effort was made to halt the so-called income tax offsets until inquiries were made by The Times.

As of Monday, CSUN had received 2,288 income tax refunds totaling $233,740. It will be several weeks before the school can tally the exact number of refunds taken in error, which could be many more.

Sheppard said the university’s mistake will not delay the processing of remaining income tax returns filed by CSUN students.


“If there are any refunds, they will go to the students directly,” he said.

CSUN mistakenly took refunds in amounts ranging from $10 to $316.

There is no penalty for such mistakes, although the state board expects the agencies to alert them immediately to any problems, Sheppard said.

“We will resume the program as soon as they ask,” Sheppard said. “They have to give us a new listing of students . . . I am sure they will return the money to the rightful owners. I don’t know any agency that would want to keep the money that doesn’t belong to them.”