The IRS has reported that more than 1.4 million tax payers are due over $1.3 BILLION in unclaimed refunds because they have not filed a 2006 tax return.  These refunds are still available, but only if a 2006 tax return is filed before April 15th, 2010.  After that, the government gets to keep your refunds.

Some people 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 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 the refund within three years, the money becomes property of the U.S. Treasury…

By failing to file a return, people stand to lose more than refunds of taxes withheld or paid during 2006. For example, most telephone customers, including most cell-phone users, qualify for the one-time telephone excise tax refund. Available only on the 2006 return, this special payment applies to long-distance excise taxes paid on phone service billed from March 2003 through July 2006. The government offers a standard refund amount of $30 to $60, or taxpayers can base their refund request on the actual amount of tax paid. For details, see the Telephone Excise Tax Refund page on IRS.gov.

In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). The EITC helps individuals and families whose incomes are below certain thresholds, which in 2006 were $38,348 for those with two or more children, $34,001 for people with one child and $14,120 for those with no children. For more information, visit the EITC Home Page.

So if you thought you did not make enough income to file a tax return for tax year 2006, you may have money due to you.  The median refund for 2006 is $604, and in this economy every penny counts.  If you haven’t filed a 2006 tax return, contact an R&G Professional today and we will help you determine if any of these unclaimed refunds belong to you.

Source: IRS.gov

It appears that for the third year in a row, NY state is planning on delaying refunds to New York taxpayers. The last two years, the state was savvy in delaying refunds by issuing a blanket letter requesting “additional documentation” in order to release refunds.  However, in many cases, the state already had all the documentation in order to process refunds.  In light of the current budget crisis, it appears New York State can no longer beat around the bush.

Two other states–Hawaii & North Carolina–have already informed their taxpayers that refunds could be held as long as July!  New York state may soon follow suit if they can not resolve the projected $8.2 Billion budget gap by April 1st.  And with the State Senate at a stand still, and continuous infighting between NY legislators and Governor Patterson, it appears almost certain that New York will also be forced to delay over $500,000,000 in state refunds.

NY State has until June to issue all refunds before they must pay out interest.  However, this is little comfort for struggling & out-of-work NY taxpayers that need these refunds just to make ends meet.

“The refund checks amount to money that belongs to taxpayers. They haven’t given the state permission to manage it for them,” said an editorial in North Carolina’s News and Record newspaper. “[The state] should have anticipated and planned for shortfalls. Time is money, and the money should be returned to its rightful owners on time.”

Both New York and North Carolina point out that delays will not apply to those returns that have already been filed. New York has paid out $293 million in refunds so far to 281,000 taxpayers; North Carolina has issued more than $400 million.

However, since the majority of taxpayers have not yet filed, these refund delays will affect the majority of NY Taxpayers.  This is not right.  NY Taxpayers pay on time, their refunds should be distributed on time.  We here at R&G Brenner recommend that if you are able to file your tax return and have not yet done so, to file as soon as possible to avoid having your refunds delayed.

Sources: ABC News, AOL News, Newsday, NY Post

Queens therapist Tracie James filed her state income tax return last month.

Brooklyn customer service rep Marcia Clement filed hers a few weeks later.

And Sharon Jenkins, a Manhattan receptionist, sent off hers even earlier – in the beginning of January.

James, Clement and Jenkins have something in common, though they wish they didn’t. They still haven’t received their state tax refunds.

“We don’t know what the holdup is, but whatever it is, it’s unfair,” Jenkins, 38, said. “They don’t have any problem taking your taxes. They shouldn’t have any problem getting it back to you when they should.

“These are hard times right now. Money is scarce for everyone.”

Scores of New Yorkers have contacted the Daily News in the past week, complaining that they are still waiting for their state refunds. The crippled economy has made the delay even more painful, many said.

“I need this money,” said Clement, a 44-year-old single mother. “I’m traveling soon, and I’ve got a baby to support.”

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“If an application for refund or credit is filed with the commissioner of taxation and finance… the commissioner of taxation and finance shall grant or deny such application in whole or in part within 6 months of receipt of the application…”

“If any overpayment of tax…credited or refunded within 45 days after the last date prescribed for filing the return of such tax…or within 45 days after such return was filed, whichever is later…, no interest shall be allowed under this section on any such overpayment…”

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You’ve probably heard before that if you’re getting a big, fat tax refund check, you’re doing something wrong. Now there’s a new reason to fine-tune those payroll withholding elections. The economic meltdown is hitting statehouses around the country so hard that some are holding their residents’ tax refund checks hostage.

Budget crises in Kansas and California have already forced those states to halt tax refund processing. In California, there’s even been talk of sending out government IOUs instead of money.

In New York, state officials insist they have enough money set aside to pay tax refunds, but tax preparers in the state say refund checks are taking an awfully long time to arrive. And around the country, with 46 states facing budget crises, according to the Center on Budget and Policy Priorities, some taxpayers worry that their refund checks might be withheld as well.

When Camarillo, Calif., resident Christine Hughes logs in to check on the status of her refund, all she sees is this disheartening message:

“Your refund cannot be issued at this time. Due to the state’s persistent cash flow problems, the State Controller has directed (this agency) to stop sending refund requests to the State Controller’s office for processing.”

Hughes says she and her husband are awaiting $1,000 in refunds from California.

“It’s pretty ridiculous, but what can we do?” she said.

California officials suspended tax refund payments in January to free up $2 billion for state operations as the state’s budget crisis reached epic proportions — with a $42 billion deficit and coffers essentially running on zero for 17 months. Despite the budget compromise forged on Feb. 19 by Gov. Arnold Schwarzenegger and the state Legislature, it’s still not clear when refund payments will resume.

This is the message California taxpayers get when logging in to check the status of their tax return.

In Kansas, refunds were halted temporarily by a budget battle pitting Democratic Gov. Kathleen Sebelius against the Republican-controlled Legislature. The lawmakers passed a budget with spending cuts of around $300 million, but Sebelius refused to sign it. At the same time, she had asked to borrow $225 million from another government agency to cover the refund payments, but Republicans blocked that. The two sides reached a deal last week and state officials there say refund checks should be sent out shortly.

Placing tax refund payments in limbo could make states liable for interest payments, but many state governments have given themselves a wide grace period – much more than your bank gives you. In California, residents who are forced to wait for their returns are entitled to interest payments only if the delay extends 45 days beyond April 15.

Hughes said she thinks it’s unfair for state officials to treat her refund like a free loan. She plans reduce her paycheck withholding for state taxes until her refund arrives.

“If they can’t pay the taxpayers back what we are owed, we should not be obligated to give them any more of our hard earned money to mismanage,” she said.

Red Tape Wrestling Tips: A withholding cautionary tale
Of course, residents of any state with an income tax would have nothing to fear if they’d set their paycheck tax withholding amounts to the appropriate level. Many people don’t, and in fact relish the thought of a big refund check every spring. That’s wrong-headed.

BankRate.com says that last year, the average federal tax refund check was $2,700, meaning the average taxpayer gave Uncle Sam $225 too much every month. Fine-tuning that withholding amount could be your very own stimulus package.

But don’t overdo it. If you underpay your taxes this year and owe a big bill next April 15, in most cases you’ll be charged underpayment penalties.

You can change your withholding amount at any time by getting a W-4 form from your employer. The IRS offers a handy withholding payment Web-based calculator. This form will only help you fine-tune your federal tax payments, but state tax payments are generally based on similar formulas, so the tool is still helpful.

If you haven’t examined your withholding elections for a while, now is a good time to look. In this economy, you should keep as much of your money in your own hands as much as possible.

Source: MSNBC.com