IRS Holding $1.3 Billion in Refund

March 3, 2010 Taxation in USA

Form 1098In a statement released on March 2nd, the US Internal Revenues Services (IRS) is reminding US taxpayers that it holds USD 1.3 billion in unclaimed tax refunds for nearly 1.4 million individuals who did not file 2006 tax returns.

At the same time, the IRS has stated that in order to receive any refunds, the taxpayer is required to submit a paper return (as electronic returns are not available for previous years) by April 15th 2010. The US Government grants a three year window for tax refund claims, upon the expiry of which any unclaimed funds will become property of the US Treasury. According to the IRS, the median refund is calculated to be approximately USD 604. Taxpayers in the US Armed Forces and in the states of New Hampshire and Alaska are expected to receive the highest payouts, with averages of USD 821, USD 706 and USD 693 respectively. Individual taxpayers in Idaho are set to receive the lowest tax refunds in the US for year 2006, with a median figure of USD 482. The highest number of taxpayers, 159 700 individuals eligible for tax refunds, are reside in the state of California.

According to the IRS, in many cases the tax payers are eligible to receive a Telephone Excise Tax Refund, which pays up to USD 60 for most individuals who possessed a residential or mobile telephone in 2006. Further, low and middle income earners are likely to be eligible to receive payment from the Earned Income Tax Credit (EITC), which applies to individuals and families earning below pre-set thresholds and raising two or more children. However, the tax refund will be used be the IRS to offset any taxes owing by the individual for the 2007, 2008 and 2009 tax years.

Photo by Josh Thompson