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Statue Of Limitations On Tax refunds due to you.
By: Tom Herman...Wall Street Journal (2/11/2007)insert in "local"Daily Herald Newspaper
It appears many (*)people who procrastinators don't understand the
basic rules. This causes the person to miss out on collecting valuable refunds.
The short answer is you generally don't have an unlimited amount
of time to claim a refund. No matter how strong a case you may have.
the Internal Revenue Service says:If you think you're due a refund but haven't filed a return for the year at issue, you generally must file your return "within three years from the date return was due...(including extensions) to get that refund,"
As with other tax issues, there can be exceptions. See Publication 17, Chapter One, available on the IRS Web site...Click to access Government link
IRS studies have indicated wide spread ignorance or misunderstanding of these rules:
For example, I reported a year ago that the IRS said it was holding more than $2 billion in unclaimed refunds for about 1.7 million people who for
hadn't bothered to file returns for 2002.
To collect, those people typically had to file their 2002 returns by mid-April of 2006.
*Added and sentence size modified by page author.
What to do if you get a letter from the IRS
Starting next month...October 2007...the IRS will begin doing random audits of about 13,000 individual 2006 tax returns. The audits will continue for the next three years. What should you do if you're chosen for an audit?
Don't panic . A random audit is just that -- random. It's not a signal the IRS has found something wrong. Most likely you'll get asked for documentation on specific areas of your tax return. Send those documents via mail or e-mail, and that may be the end of it. Or, you might have to meet with an agent at a local IRS office.
Answer promptly . Always respond on or before the deadline, even if you're asking for more time to prepare. The IRS almost always grants extensions, but it doesn't respond well to hearing nothing from you. If a tax preparer helped you file, immediately send him or her a copy of the IRS letter you received.
Know audit trouble spots . For example, no documentation for charitable donations, incomplete backup for business expenses and declaring a dependent who doesn't qualify are trouble spots, says Greg Rosica, an Ernst & Young tax partner and contributor to "The Ernst & Young Tax Guide 2007".
If you did a complete job when you filed, then an audit will be no sweat.
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