Unclaimed Tax Refunds

Each year, the IRS announces how much money is available to individuals via unclaimed tax refunds. The most common cause of a refund going unclaimed is failure to file a tax return. But there are also undeliverable refunds due to bad mailing addresses and other credits that remain unclaimed.

In this publication, we're going to cover the topic of unclaimed tax refunds. As part of that discussion, we'll provide some examples of unclaimed refunds, including the dollars left unclaimed each year. We'll also explain the process for claiming a refund. Finally, we'll tell you how to ensure you received the refund you're owed.

Tax Refunds

Additional Resources

The availability of tax refund dollars stem from one simple fact - the amount of income taxes paid is greater than the amount of taxes owed. But there are other tax rebates or credits owed taxpayers that go unclaimed too. This includes the Telephone Excise Tax Refund of 2006, the Economic Stimulus Payment of 2008, the Recovery Rebate Credit of 2009, as well as the Earned Income Tax Credit.

Examples of Unclaimed Refunds

The list below contains some examples of unclaimed tax refunds.

Back in 2006, taxpayers were permitted to claim a credit for excise taxes the government had improperly collected. The refund could be as high as $60 depending on the number of dependents and exemptions claimed by the taxpayer. Despite the fact no substantiation was required, 28% of taxpayers failed to claim this credit.
In 2008, the federal government issued Economic Stimulus payments to all eligible taxpayers. Nearly 280,000 of those checks were classified by the United States Postal Service as undeliverable. This translates into $163 million in lost or missing refunds.
In 2008, approximately 104,000 standard tax refunds were also classified as undeliverable. This amounted to $103 million in unclaimed refunds.
The most common source of unclaimed tax refunds has to do with individuals failing to file tax returns. The dollars associated with these refunds are quite large - $2.0 billion in 2002, $2.2 billion in 2003, $1.2 billion in 2004, and $1.3 billion in 2005.

Please note that unclaimed refunds associated with tax returns must be claimed no later than three years after the tax year filing deadline. For example, taxpayers entitled to a refund in the tax year 2009 would have until April 15, 2013 to claim their refund.

Claiming a Tax Refund

If a taxpayer fails to claim a refund, then the money becomes the property of the U.S. Treasury. As mentioned earlier, the easiest way to claim a refund is to file a tax return. Taxpayers owed a refund are not penalized for filing a return after its due date. Tax forms for prior years can be obtained by calling the IRS at the toll free number 1-800-829-3686 or by visiting the IRS website.

Once filed, refund information can be obtained from the IRS's "Where's My Refund" website 72 hours after the IRS receives the electronic return. Information for tax returns mailed to the IRS can take as long as three to four weeks to obtain.

Unfortunately, the information for prior tax year returns are not available if filed after the most current tax year return. For example, if a 2009 tax return is filed in January 2010, and a 2008 return is filed in February 2010, then the information on the "Where's My Refund" page will be for the tax year 2009. Additional information on all returns can only be obtained by calling 1-800-829-1954.

Ensuring a Tax Refund is Delivered

The easiest way to collect a tax refund is by choosing to receive the refund as a direct deposit into a personal checking or savings account. This eliminates the possibility of lost or stolen checks. Electronically filing a tax return also increases the chance of receiving a refund, since the IRS is able to acknowledge its receipt of the document electronically.

When changing a mailing address, the IRS should be notified using tax form 8822. When a tax refund is due and undelivered, the "Where's My Refund" website will prompt the taxpayer to update their address for up to 12 months.

Finally, if you think your refund is lost or undeliverable, you can call the IRS's toll free assistance telephone line at 1-800-829-1040. This telephone number can be used to both check the status of a refund as well as confirm a change of address.

About the Author - Unclaimed Tax Refunds

Tax Resources on the Web