When You Don't Collect Your Tax Refund

Most people are excited when they find out that they are eligible for a tax refund. However, there are also some cases in which people somehow never get notified of their refund or, for whatever reason, don’t receive it. If this ever happens to you, you may be wondering what your options are and whether or not you will ever see that refund to which you are entitled. However, take a deep breath and relax. Chances are, you can still collect on that refund you’re owed.  

The Three Year Rule

The good news is that the IRS gives you lots of leeway in terms of how long you have to receive your refund. In general, you have a whopping three years from the date of the original deadline of the tax return which warranted you a refund to collect that refund.

So, as long as the three year deadline hasn’t passed, you can still get your money. There are, however, a couple of exceptions to that rule.

To start with, you actually have seven years to claim a refund that resulted from deductions for bad debt or worthless securities. Plus, if you cannot manage your finances due to verifiable physical or mental ailments, the three year rule does not apply in your situation.

After Three Years

If you fail to claim your refund within the allowed three years and none of the above exceptions apply to your situation, then your refund will be termed an “excess collection,” meaning it can no longer be sent to you or applied to taxes you owe.

In effect, it basically goes away, as if it never existed.

To avoid having this happen to you, file your returns when you are supposed to, update all contact information as soon as possible, and always work closely with a qualified accountant and/or financial adviser.