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15 Mar, 2013 18:23

IRS has $917 mln in unclaimed refunds that are about to expire

IRS has $917 mln in unclaimed refunds that are about to expire

American taxpayers who have not yet filed for their 2009 tax returns are unlikely to see the money. The IRS has over $917 million in unclaimed refunds that will expire in one month.

About 1 million US taxpayers from all 50 states failed to file their returns in 2009, but unless they do so before April 15, they won’t be getting their checks.

In the US, individuals making less than $9,750 a year are not required to file taxes. Some people are unaware that federal taxes have been taken out of their paychecks and that the IRS owes them money. Others choose not to file returns because they don’t believe they would get much cash back, and don’t consider the paperwork worth their time.

The IRS gives taxpayers three years to claim a refund, after which Uncle Sam gets to keep the money. There is no penalty for filing a late return, but hundreds of thousands of Americans might not even be aware of the fact that they qualify.

As a result, the US Treasury could be making more than $917 million from unclaimed refunds from 2009.

And for those who do file a late return, they will be experiencing a delay in payment – especially if they also failed to file returns for 2010 and 2011, the IRS says. The Treasury is also able to withhold refunds if taxpayers have outstanding debt, like unpaid student loans, child support and federal or state taxes.

Low-and middle-income Americans, primarily those with children, may also qualify for Earned Income Tax Credit (EITC). But one in five US residents are unaware that they qualify for the EITC and may therefore be overpaying the IRS, rather than filing for the deduction.

The IRS announcement regarding the number of unclaimed refunds comes just one month before the deadline to file for them, giving taxpayers only a short amount of time to determine if they are eligible. But even though the IRS has so many unclaimed refunds, it still claims to struggle with the high number of tax returns.

The “Where’s My Refund?” tool on the IRS website has been unavailable numerous times this season, and the IRS blames taxpayers for clicking on it too much and overwhelming the system. The agency has urged taxpayers to only check their refund once a day, or limit use of their website to weekends.

In February, an IRS spokesperson told the Associated Press that it was receiving more than 1 million tax returns every day and that the most common question the agency is hears is about people’s refunds.

“I think what we’re seeing is just part of the natural evolution in the refund process,” IRS spokesman Terry Lemons told AP. “Twenty-five years ago, you desperately checked the mailbox every day.”

But by already promising delays in late tax returns and claiming to have an overwhelmed system, taxpayers who file for a 2009 return could be waiting months for their money.