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IRS Delaying Refunds Again-Especially Those over $10,000

February 14, 2014


Once again the IRS is delaying refunds again this year, especially those in excess of $10,000. Maybe the Treasury is going broke, who knows.

Although we are early into the tax filing season I have seen more than one refund claim being diverted into the 21 day "potential fraud" examination batch. One of these was electronically filed on October 30, the opening day of tax filing season. As do many taxpayers, this client has additional tax withheld each pay check (giving the government an interest free loan) in order to get a large refund at the end of the year. There is nothing unusual about his tax return as he is single with no home ownership deductions and nothing unusual other than the fact that for many years he and his former spouse have been claiming their daughter (now 17 years of age) for whom they have joint custody pursuant to the terms of their divorce agreement MANY years ago.

The only other thing is that the taxpayer's income, also not drastically high, is in excess of the national average and his refund due to excess withholding, is slightly over $10,000.

According to the IRS refund cycle chart he should have received his refund between February 12th and 15th. However when he checked the IRS site to determine if the refund was lost, it stated that he should receive his refund within 21 days of the date that it was received. The magic regarding the 21 day refund cycle is that this is the time that the IRS gives itself to pull a tax return that the computer flags for potential fraud and be reviewed. So why would a tax return that is basically the same as had been for many years years be flagged for potential fraud? The answer can only be that returns with high refund amounts are being rejected for potential fraud.

So if you don't want a problem with the IRS issuing your refund, here are some suggestions:

  1. Calculate your withholding to avoid refunds of more than $10,000
  2. Double check your tax return for errors.
  3. If you have joint custody alternating dependency deductions be sure to attach Form 8332 "Release/Revocation of Release of Claim for Exemption for Child by Custodial Parent"

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