$1.3 billion in 2005 tax refunds goes unclaimed

By STEPHEN OHLEMACHER, Associated Press Writer

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By Beth Boehne

Story Created: Mar 3, 2009 at 12:46 PM EST

Story Updated: Mar 3, 2009 at 12:46 PM EST

WASHINGTON (AP) — Time is running out for more than a million taxpayers to file for $1.3 billion in unclaimed tax refunds from 2005.

The Internal Revenue Service said Tuesday that the taxpayers are still owed refunds because they never filed tax returns for 2005. The missing taxpayers have until tax day — April 15 — to claim their 2005 refunds, or the money becomes the property of the U.S. Treasury.

"Especially in these tough economic times, people should not lose out on money that is rightfully theirs," IRS Commissioner Doug Shulman said in a statement. "People should check their records, especially if they had taxes withheld from their paychecks but were not required to file a tax return. They may be leaving money on the table, including valuable tax credits that can mean even more money in their pockets."

The IRS estimates that half of those owed refunds would receive more than $581.

There is no penalty for filing a late return that qualifies for a refund, the IRS said. But most taxpayers get only three years to file or they forfeit the money.

Taxpayers must also have filed returns for 2006 and 2007 to receive refunds from 2005.

Some taxpayers might not have filed because they made too little income to require a tax return, but they still had money withheld from their pay, the IRS said. Tax returns for 2008 are due April 15.

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