IRS Has USD1.2bn For 2004's Non-Filers

by Mike Godfrey, Tax-News.com, Washington

20 March 2008

Unclaimed refunds totalling approximately USD1.2bn are awaiting around 1.3 million people who failed to file a federal income tax return for 2004, the US Internal Revenue Service announced on Wednesday.

However, to collect the money, a return for 2004 must be filed with an IRS office no later than April 15th, 2008.

Those due a refund who did not file a 2004 tax return could collect even more money by also filing a 2007 tax return to claim the economic stimulus payment, the IRS further announced.

Millions of retirees, disabled veterans and low-wage workers who usually are exempt from filing a tax return must do so this year in order to receive the stimulus payment. Eligible people will receive up to USD600 (USD1,200 for married couples), and parents will receive an additional USD300 for each eligible child younger than 17.

The IRS estimates that half of those who could claim refunds for tax year 2004 would receive more than USD552. In some cases, individuals had taxes withheld from their wages, or made payments against their taxes out of self-employed earnings, but had too little income to require filing a tax return. Some taxpayers may also be eligible for the refundable Earned Income Tax Credit.

In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund.

If no return is filed to claim the refund within three years, the money becomes property of the US Treasury.

For 2004 returns, the window closes on April 15th, 2008. The law requires that the return be properly addressed, postmarked and mailed by that date. There is no penalty assessed by the IRS for filing a late return qualifying for a refund.

“Time is getting short for claiming the tax refund you may be entitled to,” warned acting IRS Commissioner Linda E. Stiff.

“But you can’t get it unless you file the tax return. Don't take a chance on losing your tax refund. And this year, remember that you need to file a 2007 tax return in order to receive an economic stimulus payment,” she added.

The IRS went on to remind taxpayers seeking a 2004 refund that their checks will be held if they have not filed tax returns for 2005 or 2006. In addition, the refund will be applied to any amounts still owed to the IRS, and may be used to satisfy unpaid child support or past due federal debts such as student loans.

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