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Does the IRS still owe you an income tax refund?

On Behalf of | Aug 9, 2022 | Tax |

Have you received your income tax refund for 2021 yet? Whether you’re waiting for a refund for your Texas business or an individual return, you may get a bonus on top of the refund. The internal Revenue Service should provide you with interest if it is late.

Most tax refunds are processed by July 2022

In its final report on the 2021 tax year, the IRS indicated that it had processed 97% of all tax refunds. That percentage is typical, yet in most years, some refunds lag way behind, with taxpayers waiting months and even years for money owed to them. Why does this happen?

The IRS owes you interest on top of your refund if you have not received the money within 45 days of your filing date. For every day that your refund is late, the IRS owes you 4% compounded daily. Due to Federal Reserve interest rate hikes, the interest changed to 5% daily if your refund didn’t arrive by July 1. That percentage was based on the Fed’s rates plus 3%. As the Federal Government has continued to raise its base interest rate, taxpayers who still haven’t received their refunds may get even higher rates. However, you should note that you won’t get rich, as the average taxpayer who received interest in 2021 received only $18.

What if the IRS doesn’t send my refund?

Most tax refunds that have not been processed were not filed electronically. Instead, they were sent in on paper through the United States Postal Service. If the IRS claims it never received your return, you may have a legitimate tax litigation dispute.

In a tax dispute case, you must prove when and how your tax forms were filed. Giving the IRS proof underscores the validity of your claim.