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How Long Can the IRS Delay Your Tax Refund?

Posted By Amanda On In Tax Tips | Comments Disabled

The recent government shutdown has once again left taxpayers asking Does a Government Shutdown Delay Your Tax Refund? [1] There are still quite a few people waiting on their tax refunds who filed earlier this year. In addition, many more people plan to file by the tax deadline extension [2] on October 15.

Earlier Delays

The government shutdown compounds the delays from earlier this year. During the current tax season, there were a lot of disgruntled Americans. Typically this comes from the people who have to pay taxes come April 15th; however, this time it was from the people who were owed a tax refund from the federal government. Specifically, tax refunds that were due in 2013 from the 2012 tax season were delayed [3] due to the delays in finding resolutions for the fiscal cliff and Alternative Minimum Tax (AMT) issues. The start of tax filing season was delayed until January 30th, 2013 for people impacted by the AMT patch [4]. Form 4562: Depreciation and Amortization was not processed until February 10th, 2013, and Form 8863: Education Credits was not processed until February 14, 2013.

How Long Can the IRS Delay Your Tax Refund?

It turns out that there is no set time schedule for when refunds have to be given to people who file taxes (and who qualify). This is probably not the answer that you wanted, and is slightly unsettling. The IRS doesn’t like to leave us completely in the dark; in prior years they issued a refund schedule to show how long tax returns submitted each week should be receiving their refunds (if any are due). As an example, here is the tax refund schedule for 2012 [5]. In 2013 the tax refund schedule [6] was updated to state that the “IRS issues most refunds in less than 21 days, it’s possible your tax return may require additional review and take longer.”

However, we can look to past years to see how long it typically takes to get a refund. Typically, you will see your tax refund in three weeks if you e-filed, and in six weeks if you sent your tax return in on paper through the mail.

Tip: Realize that e-filing your tax return, and choosing direct deposit will ultimately get your refund to you more quickly than filing by paper.

Reasons Why Your Refund May Be Stuck in a Holding Pattern

There is a sort of “holding pattern” that the IRS may take before either taking your refund to satisfy delinquent debts, or sending it to you. This is regardless of any imposed refund delays due to government shutdown, congressional policy, state of the economy, etc.

Reasons why your refund may be stuck in a holding period:

  • You Failed to File Taxes in a Previous Year: Sometimes your current tax refund will be withheld if you did not file a tax return in a previous year. At this point, you would need to prove that you do not owe taxes from a previous year. The IRS will release your funds if you file for the missing year and show that you did not owe any taxes, or if you send in a letter in explaining why you did not file. You can also send a letter requesting more time to look into the issue.
  • You are on a Payment Plan for Back Taxes: There may be a holding period of your refund if the IRS is trying to determine whether or not your money should go towards a payment plan from taxes that you owe in a previous year. This one truly is temporary because when they find out that you do still owe back taxes and are working through a repayment plan, they will most likely use your tax return from this year to go towards those payments.
  • Your Spouse Filed an Injured Spouse Allocation Form: Form 8379 is used when your spouse feels they are an “Injured Spouse”. The IRS considers a person an “Injured Spouse” if their spouse is delinquent on a debt that the federal government is withholding a tax return to satisfy, and thus your part of the tax return has also been withheld by default (because your filing status was married filing jointly). Before the IRS can determine whether or not your spouse is, in fact, an Injured Spouse, a tax refund will be held.

If you suspect that your tax refund is delayed or withheld, check out where’s my refund [7] to confirm its status. The three statuses that will display are: (1) Return Received, (2) Refund Approved and (3) Refund Sent. Like everything else seems to be, the IRS has gone mobile. You can check the status of your refund using an iPhone or Android tax app [8] called IRS2Go. Also, be aware that the IRS is allowed to withhold your refund to satisfy certain delinquent debts, such as back child support, state or federal taxes owed from previous years, defaulted federal student loans, and/or certain debts under bankruptcy filings (Chapter 13 and Chapter 7). If you suspect this is the case, be sure to contact the Treasury Offset Program (TOP) Call Center at 1-800-304-3107.

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