September 23, 2008

IRS Has $1.2 Billion for People Who Have Not Filed a 2004 Tax Return

Usually the IRS wants your money, however unclaimed refunds totaling approximately $1.2 billion are awaiting nearly 1.3 million people who failed to file a federal income tax return for the tax year 2004. However, to collect the money, a return for 2004 must be filed with an IRS office no later than October 15, 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 estimates that half of those who could claim refunds for tax year 2004 would receive more than $552. 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 plus extensions, the money becomes property of the U.S. Treasury. For 2004 returns, the window closes on October 15, 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. You can't get a refund unless you file a tax return. Don't risk losing your tax refund. The IRS reminds 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. By failing to file a return, individuals stand to lose more than refunds of taxes withheld or paid during 2004. Many low-income workers may not have claimed the Earned Income Tax Credit. Although eligible taxpayers may get a refund when their EITC is more than what they owe in tax, those who file returns more than three years late would be able only to apply it toward the taxes they owe (if any). They would not be able to receive a refund if the credit exceeded their tax.