After submitting your tax return on time, you are eagerly waiting for your refund, only to find that weeks have passed with no sign of it being deposited. You start to feel frustrated and ask yourself, "Why is the IRS keeping my tax refund?"
A delayed refund typically indicates that the IRS has detected a discrepancy, debt, or security concern related to your account. This hold may be the result of a simple error made by you or your tax preparer, or it could be linked to more serious issues such as tax refund offsets or potential identity theft.
No matter the cause, it can be disappointing not to receive your refund in a timely manner. If you believe that the IRS is holding your refund unfairly, there are steps you can take to resolve the situation quickly. Below are ways to identify potential reasons for a tax refund hold and address any tax-related matters with as little trouble as possible.
Program for the Offset of Federal Tax Refunds
What Does a Tax Refund Offset Mean? In cases where you owe taxes from previous years, the IRS has the authority to take a portion or the entirety of your current refund to cover that debt – this is referred to as a tax refund offset. This program is utilized by the federal government to lessen outstanding tax debts.
If you are impacted by this situation, it is recommended to either pay off the outstanding amount or seek advice from a reputable tax professional. A tax expert can validate the amount owed and potentially reduce it by revising previous tax returns. Taking prompt action is essential, as charges and interest are likely accruing on your account on a monthly basis.
To explore potential solutions for resolving tax obligations, complete our brief Tax Survey, which provides an expert assessment of your tax circumstances and refund offset situation.
Unfiled Tax Returns
Have you failed to file tax returns in previous years? The IRS could withhold your refund until those late returns are submitted and processed.
Similar to overdue taxes, unfiled returns need to be dealt with promptly to avoid further fines. If you neglect to file, the IRS may eventually complete a return on your behalf, which may not include the deductions and credits you could have claimed, resulting in a higher tax bill. Your refund may be used to pay off these outstanding taxes through a tax refund offset.
Seek assistance from a reliable tax professional to file these returns and reduce any penalties and interest. Complete our brief Tax Survey for a thorough assessment of your tax situation and discover how to comply with the IRS.
Tax Return Under Review
One common reason for a delayed refund is when the IRS uncovers a possible mistake on your tax return. This could be as simple as a calculation error or typographical mistake, or it could be more serious, such as questionable deductions or credits claimed. If this is the case, the IRS will get in touch with you to fix the error or provide evidence for your claims. If you haven’t heard from them, be proactive and reach out to the IRS as soon as possible.
There is also a possibility that the IRS suspects identity theft, as they identified over a million tax returns as potential cases of identity theft in 2023—less than 1% of all returns filed.
What occurs when your tax return is being evaluated by the IRS? The IRS may need additional time to clarify the information or calculations provided in your return, particularly focusing on your taxable income, withholding amounts, credits, and deductions.
For how long can the IRS delay your tax refund for evaluation? The duration of this process can range from 45 to 180 days, depending on the discrepancies identified and the evidence presented.
If the IRS requires further verification of the information in your return, they may hold your refund until the evaluation is completed. To inquire about the reason for the delay and to assist in resolving the issue, contact the IRS at 800-829-1040 and work with the representative assigned to your case.
Other Government-related Debt
If you have outstanding government debts like overdue student loans, unpaid child support, or state income tax debts, the IRS has the authority to use a tax refund offset to collect your refund. Your federal refund can be withheld to cover these obligations.
In this situation, reaching out to the IRS may not be effective. It is recommended to address the debt directly with the relevant agency you owe money to.
Conclusion
If there is a delay in receiving your refund, these are the common reasons behind it. Do not worry – this does not necessarily indicate any wrongdoing on your part. Sometimes, the IRS selects returns for a closer review that end up being perfectly legitimate.
Nevertheless, do not overlook the situation, as issues such as tax refund offsets can worsen with fines and interest if not addressed promptly. It is best to contact the IRS directly and ask about why your refund is being held up. Be prepared to provide proof of your identity or tax return information.
Interacting with the IRS may not be enjoyable, but it is essential to respond promptly and cooperatively to their inquiries for your financial well-being. Ignoring them could result in severe actions like wage garnishments, bank seizures, and tax liens. Taking a proactive approach to address any delays or discrepancies can help avoid more serious issues later on.
If you suspect that the IRS is withholding your refund because of a tax refund offset or unfiled returns, fill out our short Tax Survey for an expert assessment of your tax status and to see if you qualify for IRS-approved assistance programs. The Tax Relief Survey, created by Priority Tax Relief, aims to assist individuals with tax liabilities in gaining a better understanding of their financial position, exploring options, and taking steps towards a stable financial future.
Are you ready to start working towards financial freedom? Let Priority Tax Relief lead the way. Our team can help you become compliant with IRS regulations and work directly with the IRS to reduce your tax debt and address any refund offsets. Reach out to us today to get started.
Frequently Asked Questions
What is a tax refund offset and how does it work?
A tax refund offset is when a portion of your federal tax refund is used to pay off certain debts, such as tax debt or child support, owed to a treasury agency.
Why was my federal tax refund offset?
Your federal tax refund may have been offset if you owe a debt to a treasury agency, such as past-due child support or tax debt.
How can I find out if my tax refund was offset?
You can receive an offset notice from the treasury agency detailing the offset payment and the reason for the offset.
Can a joint tax return be offset for my spouse's debts?
If you have filed a joint tax return, the portion of the refund may be used to pay off your spouse’s debts owed to a treasury agency.
What should I do if my tax refund was offset and I believe it was a mistake?
If you believe your tax refund was wrongly offset, you can contact the treasury department or the agency responsible for the debt for further instruction.
Are all types of debts eligible for tax refund offsets?
Not all debts are eligible for tax refund offsets. Typically, only certain debts owed to specific treasury agencies may be subject to an offset program.
