IRS Looks to Distribute $760 Million in Unclaimed Tax Refunds

The Internal Revenue Service is giving the Mega Millions jackpot some serious competition, with tax refunds totaling $760 million ready to be handed over to an estimated 918,600 taxpayers who did not file a federal income tax return for 2010.

The IRS estimates that half the potential refunds for 2010 are for amounts greater than $571. To collect the money, a tax return for 2010 must be filed by Tuesday, April 15, 2014, the IRS said Wednesday.

“The window is quickly closing for people who are owed refunds from 2010 who haven’t filed a tax return,” said IRS Commissioner John Koskinen in a statement. “We encourage students, part-time workers and others who haven’t filed for 2010 to look into this before time runs out on April 15.”

Some taxpayers 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 tax 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 a refund within three years, the money becomes the property of the U.S. Treasury.

For 2010 tax returns, the law requires that the return be properly addressed, mailed and postmarked by April 15, 2014. There is no penalty for filing a late return qualifying for a refund.

The IRS is reminding taxpayers who are seeking a 2010 refund that their checks may be held if they have not filed tax returns for 2011 and 2012. In addition, the refund will be applied to any amounts still owed to the IRS or their state tax agency, and may be used to offset unpaid child support or past due federal debts such as student loans.

By failing to file a tax return, taxpayers stand to lose more than just their refund of the taxes that were withheld or paid during 2010, the IRS pointed out. In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit. For 2010, the EITC is worth as much as $5,666. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2010 were $43,352 ($48,362 if married filing jointly) for those with three or more qualifying children, $40,363 ($45,373 if married filing jointly) for people with two qualifying children, $35,535 ($40,545 if married filing jointly) for those with one qualifying child, and $13,460 ($18,470 if married filing jointly) for people without qualifying children.

Current- and prior-year tax forms and instructions are available on the Forms and Publications page of IRS.gov or by calling 800-TAX-FORM (800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for 2010, 2011 or 2012 should request copies from their employer, bank or other payer.

If these efforts are unsuccessful, taxpayers can get a free transcript showing information from these year-end documents by using the Get Transcript service on IRS.gov. Taxpayers can also file Form 4506-T to request a transcript of their tax return.

The IRS provided a state-by-state breakdown of the number of individuals who did not file a 2010 tax return with a potential tax refund, and the average and total dollar amounts of the refunds: