What are some important IRS refund issues?

Taxpayers can face a number of significant issues in connection with their income tax refunds, including the following:

• Lost or missing refund checks
• Erroneous refunds
• Uncashed refund checks
• Refunds to a deceased taxpayer
• Statute of limitations for claiming a refund
• Joint refunds to divorced or separated couples
• The Refund Offset Program

Each issue is discussed below.

Lost or missing refund checks

If you haven't received your refund check after a number of weeks, you're not alone. The U.S. Postal Service returns close to 100,000 refund checks to the IRS each year because of incorrect addresses or the lack or forwarding addresses. In some cases, refund checks are lost or stolen.

If you are concerned about not receiving a refund check, wait at least six weeks from filing your return before taking any action. The IRS generally takes six weeks or so to process a return. After six weeks, you might start by calling Tele-Tax, at (800) 829-4477, using a touch tone phone, and choose the refund status option. If you don't resolve the matter through Tele-Tax, then take one or more of the following steps:

• Fill out and submit Form 3911, Taxpayer Statement Regarding Refund, to the IRS Service center where you filed your return. Again, allow four to six weeks for a response.
• Contact the IRS Taxpayer Advocate's Office (formerly known as the Problem Resolution Office) in your district only after normal channels of contact have failed. The TAO is the Internal Revenue Service's complaint department. Contact it first by mail, including copies of your return and correspondence from the IRS as well as your daytime telephone number. You should also indicate how and when you informed the IRS of the problem with your refund check.
• Contact the refund section of IRS Taxpayer Services at (800) 829-1040 and explain your situation to an employee, who can probably tell you why there has been a delay. If the reason is not apparent, the employee will generally complete Form 3911 for you.

Tip:           To avoid any potential refund problems due to your moving, submit Form 8822, Change of Address, with the IRS so it can have your current address.

Erroneous refunds

Sometimes, the IRS sends out refunds and later realizes that they were issued erroneously. If the IRS notifies you that it sent you a refund by mistake, you are responsible for returning the money. If the erroneous refund was less than $50,000, the IRS can't charge you any interest for the time before it notified you of its error. It can charge you interest for the period after it notified you, though. In addition, it can't take out a lien on an erroneous refund that you now must return.

Uncashed refund checks

You have up to 12 months to cash a refund check. After 12 months, you need to return the uncashed check to the IRS and request a new refund check. You must send the check along with a completed Form 3911, Taxpayer Statement Regarding Refund, to the IRS Service center where you filed your return. Note on the form that the enclosed check is over 12 months old and that you are requesting a replacement check.

Refunds to a deceased taxpayer

If you are claiming a refund on a deceased taxpayer's tax return, you must attach Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, to the return. If a surviving spouse or court-appointed representative is filing a joint return, it is unnecessary to include Form 1310.

Statute of limitations for claiming a refund

Generally, your deadline for claiming a refund is the later of these two dates:

• Three years after the original due date of your return, including extensions of time to file
• Two years from the date you paid the tax

You do so by filing an amended return.

Technical Note:  In a few specific circumstances, you have longer periods in which to claim a refund. These situations are beyond the scope of this discussion. Consult additional resources.

Tip:           If you accepted a refund and later discovered that you were entitled to a larger refund, you are subject to the same deadline for claiming the additional refund amount.

Joint refunds to divorced or separated couples

If you and your ex-spouse or separated spouse can't agree on how to divide up a joint refund amount, you can file Form 1040X, Amended U.S. Individual Tax Return, and request separate checks from the IRS. You determine each spouse's interest in the refund by completing Form 8379, Injured Spouse Claim and Allocation. Attach this worksheet to the 1040X form. To read further about injured spouse claims, refer to Pre-Marriage Tax Debts and the Injured Spouse Rules.

Caution:   Note that special rules may apply if you live in one of the community property states (presently Alaska (which has an optional system), Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin) or Puerto Rico.

Tip:           Allocating joint refunds between divorced or separated spouses can be difficult: You should seek the assistance of a tax advisor in these circumstances.

The refund offset program

© Forefield. Neither Forefield Inc. nor Forefield Advisor provides legal, taxation, or investment advice. All content provided by Forefield is protected by copyright. Forefield claims no liability for any modifications to its content and/or information provided by other sources.