IRS Holding $1 Billion in Unclaimed Refunds.

On February 23rd, the Internal Revenue Service said it is holding more than $1 billion in unclaimed refunds for U.S. taxpayers who didn't file federal income tax returns for the 2008 tax year. Generally, in cases where a tax return was not filed, the law provides taxpayers with a three-year window to claim the refund, if a refund was due. That means that taxpayers who did not file 2008 returns, which were due in April of 2009, have until April 17, 2012 to file a return and claim a refund.

The refunds being held by the IRS are not unsubstantial. According to the IRS, at least half of the potential refunds are more than $600.

So why would a taxpayer not claim a refund rightfully owed to them by the government? The IRS says that many of the refunds are due to people who earned "too little income to file a return, even though they had tax withheld from their wages or made quarterly estimated payments."

The IRS however, may withhold refunds if taxpayers haven't filed returns for 2009 and 2010 or other tax years. In addition, the refund may be applied to outstanding tax owed to the IRS, unpaid child support, or other past-due federal debts, such as student loans.

Current and prior year tax forms and instructions are available on the Forms and Publications page of IRS.gov or by calling toll-free 800-TAX-FORM (800-829-3676). "Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for 2008, 2009 or 2010 should request copies from their employer, bank or other payer. Taxpayers can also get a free transcript showing information from these year-end documents by ordering it on IRS.gov, filing Form 4506-T, or by calling 800-908-9946."

To view the IRS press release which includes a state-by-state breakdown of how many individuals are owed refunds for 2008 as well the median amounts for each state click here.

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