According to an annual review, 91,823 federal tax refunds were returned to the IRS this year, down from 102,840 the previous year. The tally includes tax refunds from 1999 and prior tax years.

The IRS attributed the drop in lost refunds to an increase in the number of taxpayers opting to have their refund deposited directly to a bank account.

The total amount of returned refunds fell $4.6 million from last year's total of $72 million, the IRS said. The average per-check amount this year was $734, compared to $700 last year.

"There's a ton of refund money sitting around," Commissioner Charles O. Rossotti said. "We want to get these checks back to where they belong."

California led the states for the largest number of undeliverable refunds, with 14,648, followed by New York (8,519), Florida (8,208) and Texas (8,046). Florida had the highest average undelivered refund amount at $1,017, followed by Minnesota, ($997), and New York ($940).

According to the IRS, some of the reasons refund checks might not reach taxpayers are: people move and the tax refunds are returned to the IRS; taxpayers provide an incorrect address on their return -- numbers are transposed or information is incomplete. In addition, a death or marriage may result in a returned check.

The IRS said it keeps the information on file and forwards the full amount to the taxpayer as soon as a valid address is known. For many taxpayers owed refunds, the money will be forwarded automatically the next time a tax return is filed. There is no statute of limitations for claiming the refunds.

To prevent refunds from being lost or stolen, the IRS urges taxpayers to have their refund deposited directly to a bank account. Filing a change of address card with the post office isn't enough to guarantee delivery of a refund check, the IRS warned.

Taxpayers who have moved since filing their last tax return should file a Form 8822, "Change of Address," with the IRS. The form can be obtained by calling (800)-829-3676, or by downloading it from the IRS Web Site, www.irs.gov.

Rossotti emphasized that the number of undeliverable refunds is small compared to the total number of refunds issued. The IRS received 128 million individual tax returns in 2000 and issued 91 million refunds.

Taxpayers who think they are owed a refund can call the toll-free assistance line at (800)-829-1040.

-- By SmartPros News Staff

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