$1.3 Billion in Unclaimed 2005 Refunds

The IRS recently announced that it has unclaimed refunds totaling approximately $1.3 billion for over a million people who did not file a federal income tax return for 2005.  However, the three-year statute of limitations on refunds for 2005 expires this month.  So, if you did not file your 2005 return, you need to do so before midnight Tuesday, April 15; otherwise, any refund will be forfeited.

The IRS estimates that half of those who could claim refunds for tax year 2005 would receive more than $581.  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 U.S. 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.

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 $35,263 and had more than one qualifying child living with them, earned less than $31,030 with one qualifying child, or earned less than $11,750 and had no qualifying child.  Limits are slightly higher for married individuals filing jointly.

If you have not filed and would like to do so before April 15, you are urged to call this office immediately.  Since this is almost the end of tax season, it is a very busy time. 

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