USD1.3bn In Refunds Awaits US Taxpayers

by Leroy Baker, Tax-News.com, New York

04 March 2009

Unclaimed refunds totaling approximately USD1.3bn are awaiting over a million people who did not file a federal income tax return for 2005, the Internal Revenue Service has announced. However, to collect the money, a return for 2005 must be filed with the IRS no later than Wednesday, April 15, 2009.

"Especially in these tough economic times, people should not lose out on money that is rightfully theirs," said IRS Commissioner Doug Shulman. “People should check their records, especially if they had taxes withheld from their paychecks but were not required to file a tax return. They may be leaving money on the table, including valuable tax credits that can mean even more money in their pockets."

The IRS estimates that half of those who could claim refunds for tax year 2005 would receive more than USD581. Some individuals may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments.

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 2005 returns, the window closes on April 15, 2009. 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.

The IRS reminds taxpayers seeking a 2005 refund that their checks will be held if they have not filed tax returns for 2006 or 2007. 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.

The IRS informs that, by failing to file a return, individuals stand to lose more than refunds of taxes withheld or paid during 2005. Many low-income workers may not have claimed the Earned Income Tax Credit (EITC). Generally, unmarried individuals qualified for the EITC if in 2005 they earned less than USD35,263 and had more than one qualifying child living with them, earned less than USD31,030 with one qualifying child, or earned less than USD11,750 and had no qualifying child. Limits are slightly higher for married individuals filing jointly.

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