Thousands of Taxpayers Forego Refunds

An audit performed by the office of the Treasury Inspector General for Tax Administration examined $360 million in unclaimed refund money that the IRS is holding in an Excess Collections Account. The breakdown of unclaimed refunds includes:

  • $25 million that should have been refunded to taxpayers who filed their returns late but within the allowable three-year time period for claiming refunds.
  • $162 million that was forfeited by taxpayers who did not file a refund-bearing tax return within the allowable three-year time period.
  • $173 million owing to taxpayers who have not yet filed a tax return but who are still within the three-year time period.

A major problem with tax returns that are filed late is that the IRS computer does not keep track of payments that have been transferred to the Excess Collections Account when it is assumed that the taxpayer is not going to file a tax return. When the tax return is actually filed, there is no record of payment and in some cases the IRS assumes a balance due. There have been situations of tax liens being filed even though a refund is due the taxpayer.

The moral of this story? File your tax return on time!

You may like these other stories...

There's still time to take advantage of last-minute, tax-saving moves for dependency exemptions. For 2014, there are bigger dependency exemptions, as well as rules that, in some cases, are dauntingly complex.The 2014...
Tesco accounting probe finds “inappropriate behavior” by staff – reportsClare Hutchison of Reuters wrote on Sunday that an investigation into a 250 million-pound ($402 million) profit overstatement at...
Did you ever feel as if you're preparing taxes in the Twilight Zone? You may be more right than you think. Each year, professional preparers all over the country have to work in a shadowy reflection of the normal tax...

Already a member? log in here.

Upcoming CPE Webinars

Oct 21Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience’s communication style.
Oct 22This webinar will include discussions of important issues in AU-C 800, Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks.
Oct 23Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.
Oct 30Many Excel users have a love-hate relationship with workbook links.