IRS Says Time Running Out to Claim $1.5 Billion in Unclaimed Refunds for Tax Year 2019

The IRS building is seen in Washington, on Sept. 28, 2020. (Erin Scott/Reuters)

The Internal Revenue Service (IRS) announced Wednesday that over a million Americans have unclaimed tax refunds for the tax year 2019 and face a looming deadline to claim a total of $1.5 billion before it becomes government property.

The IRS said in a press release that nearly 1.5 million people across the United States have unclaimed refunds because they haven’t filed their tax returns for the 2019 tax year.

“The 2019 tax returns came due during the pandemic, and many people may have overlooked or forgotten about these refunds,” IRS commissioner Danny Werfel said in a statement. “We want taxpayers to claim these refunds, but time is running out.”

Normally, the deadline for filing older tax returns falls around the April tax deadline. But for 2019 returns, that window has been extended to July 17 due to the pandemic.

“With the pandemic taking place when the 2019 tax returns were originally due, people faced extremely unusual situations,” Werfel said.

There’s a three-year window for taxpayers to file returns and claim refunds. If they don’t file within three years, any money they could have received becomes the property of the U.S. Treasury.

The average unclaimed amount for the 2019 tax year is $893 per filer.

In a separate press release, the IRS issued a reminder that April 18 is the deadline for first quarter estimated tax payments for the tax year 2023. These estimated quarterly tax payments are typically made by individuals like the self-employed and entities like corporations that do not have their taxes withheld.

Also, the IRS on Tuesday announced that taxpayers in nearly two dozen states should consider filing amended tax returns for 2022 because they may have needlessly reported income from special state relief payments and stand to get bigger refunds.

Some Taxpayers Eligible for Bigger Refunds

The IRS said in a press release that taxpayers who reported certain state payments related to general welfare and disaster relief as taxable income on their tax returns did so, in many cases, unnecessarily.

The tax agency earlier this year determined that taxpayers in nearly two dozen states didn’t need to report these special payments in tax year 2022 and the IRS won’t challenge their taxability.

Taxpayers in the following states don’t need to report any state payments related to general welfare and disaster relief: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, and Rhode Island.

Alaska is also in this group, although the payments covered by the IRS notice apply only to special supplemental Energy Relief Payments.

In addition, four states are special cases in terms of relief payment taxability because they issued such payments in the form of refunds of state taxes paid: Georgia, Massachusetts, South Carolina, and Virginia.

“For these individuals, state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and the recipient either claimed the standard deduction for tax year 2022 or itemized their tax year 2022 deductions but did not receive a tax benefit,” the IRS said.

Taxpayers who meet the above criteria and needlessly paid tax on special state payments can file an amended return either electronically or in paper form.

Electronic filers can opt for a direct deposit, while paper filers can expect a paper check for any resulting refunds.