Refund Hold Program
The IRS now has begun an automated program freezing refunds of more than $300 when a taxpayer's account indicates an open Tax Delinquent Investigation within the last five years. The service center sends letters to taxpayers requesting they file the delinquent return or explain why no return should be filed. If a response is not received, the IRS prepares a substitute for return for the missing periods. Any future balance due is offset by the refund. The CERS group employs similar procedures for working skip filer cases. These are cases which involve refunds due to taxpayers who have not filed tax returns for all prior years, or in other words, taxpayers who file only when they expect a refund.

 

In tax year 1994, the Service held 98,000 refunds totaling $124 million. From the refunds held back, taxpayers filed more than 50,000 returns. The most frequent reason for calls on refund hold cases is to request W-2 wage information for non-filed years. The IRS can usually generate this data, but many of these cases are simultaneously worked under the Substitute for Return program, and the taxpayer may have received payer information with their letter or notice. This information is sufficient for data needed to file, and can even be used in lieu of Forms W-2. If a joint return is being filed, both spouses' incomes must be included, and both spouses must sign the return that is being filed.

Delinquent returns need to be mailed to the office that sent the refund hold letter. If the return is brought into a local office, when the letter originated elsewhere, or if the return is mailed to a different location, this can cause a delay. There is no need to send another current year return; doing so will only complicate processing. Once the delinquent return arrives, it will be worked as soon as possible. The earliest the taxpayer can expect a current refund is one full month after the delinquent return is processed. But, if the delinquent return shows a balance due, the held refund will be applied.

Reminder: The IRS cannot give out information about taxpayer accounts to third parties without written consent from the taxpayer.

Collection Financial Standards on Internet
The standards used in collection financial analysis - National Standards for food, clothing and other items, and Local Standards for housing and utilities and transportation - are now on the Internet. The standards have always been public information. Placing them on the Internet saves resources, improves accessibility and reduces taxpayer burden.

The Collection Financial Standards are on "The Digital Daily," the IRS World Wide Web site, under "Tax Info for You." Or click here to access the Collection Financial Standards page directly.