Procedures Used by the Internal Revenue Service To Provide Taxpayers With Refunds Not Initially Delivered by the Postal Service

Internal Revenue Service (IRS) procedures are generally adequate for providing undelivered refunds to taxpayers who file income tax returns in the year following the one in which the refunds were undelivered. However, IRS needs to take action to deliver unclaimed tax refunds to some taxpayers who may not file tax returns in succeeding years.

As of December 31, 1975, IRS was holding about $25 million in refunds belonging to nearly 200,000 individual taxpayers whose refund checks were returned as undeliverable by the Postal Service. Followup letters have been partially successful in locating taxpayers entitled to tax refunds. Of the 352,000 refund checks returned in 1975, IRS was able to redeliver 248,000, or 71 percent, of the checks to the taxpayers. However, in cases where tax refunds are paid when taxpayers file their succeeding year returns, as much as a year could pass before the refunds were sent. IRS procedures should be designed to locate a greater number of taxpayers entitled to undelivered refunds and to do it more promptly.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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