As Tax Day 2017 Approaches, More than $1 Billion in Unclaimed Tax Refunds Is About to Expire
Few Californians look forward to Tax Day. However, the reputation of Tax Day as a day of financial reckoning is perhaps undeserved. While it is true that you can discover large, unexpected tax obligations on Tax Day, most people will become aware of a large tax liability either prior to tax day or months thereafter when the IRS sends a letter or notice. While there are tax bills that may “break the bank,” most people have a significantly different experience. Unfortunately, the fear of huge tax liabilities keeps many taxpayers from engaging in the tax system. Our Sacramento tax attorneys explain:
Ironically, succumbing to these fears almost guarantees that one will face a less-than-ideal tax situation. Taxpayers who fail to file their taxes are potentially on the hook for failure-to-file and failure-to-pay penalties. Depending on the manner in which an IRS agent interprets the scenario, the taxpayer can also face additional obstruction or other tax charges. Finally, taxpayers who fail to file may forfeit their right to receive any tax refund they would otherwise be entitled to receive.
More than $1 Billion in 2013 Tax Refunds Is About to Expire
According to announcements by IRS Commissioner John Koskinen, more than one million taxpayers are still owed tax refunds from the 2013 tax filing season. That is, one million taxpayers are entitled to their share of more than $1 billion in unclaimed tax refunds. The IRS concluded that the median value of tax refunds for 2013 was $763.
In addition to potentially getting a refund, an individual may also be able to claim the Earned Income Tax Credit (EITC) by filing his or her taxes. Generally, taxpayers of low to moderate incomes benefit from the EITC. In 2013, the EITC was worth a maximum of $6,044.
It is also important to mention that taxpayers who did not file in one tax year are more likely to do so in subsequent years. If you are going to correct non-filer status for a single tax year, it often pays to look into additional instances of non-filing that may have occurred for the 2014 or 2015 tax years. Correcting all non-filing can produce a significant windfall while coming back into compliance with the U.S. Tax Code.
Taxpayers Have 3 Years to Secure Unclaimed Income Tax Refunds
Many people seem to incorrectly believe that once they have missed the tax filing deadline, they can no longer claim their tax refund. In reality, taxpayers have a three-year window in which they may claim their tax refund. Thus, because tax returns for the 2013 tax year were not due until April 2014, taxpayers have until April 2017 to claim their refund. Tax day falls on April 18, 2017, meaning that this is the last day a taxpayer can claim any tax refund from the 2013 tax year. If a taxpayer files their taxes after this date (and they may need to do so due to an IRS audit or other enforcement action), he or she will not be able to claim any refund.
No Failure-to-Pay or Failure-to-File Penalties Apply if You Are Owed a Refund
One of the main reasons why taxpayers are hesitant to file taxes after failing to file for one or more years is that they are afraid of facing non-compliance penalties. However, it is essential to note that in many cases this concern is not justified. If a taxpayer was entitled to receive a tax refund, then he or she is not subject to the late filing penalty.
Correct Failures to File and Secure Your Unclaimed Tax Refund with a Sacramento Tax Lawyer
A Sacramento tax attorney of NewPoint Law Group is here to help taxpayers in California comply with all tax filing, reporting, and related obligations. We can help you come back into compliance with the tax code and determine whether you may be entitled to receive any refunds. To schedule a confidential consultation, please call 1-800-358-0305 or contact us online.