The IRS has frozen refunds for hundreds of thousands of low-income taxpayers without telling them they’re being investigated for tax fraud or giving them a chance to defend themselves, the IRS taxpayer advocate said Tuesday…
More than three-quarters of the returns investigated were for low-income families who claimed the earned income tax credit, a program that provides tax refunds for the working poor. Delayed refunds cause a “significant hardship” for these taxpayers..
The taxpayer advocate’s office estimates up to 1.6 million refunds have been frozen over the past five years. Once a taxpayer’s refund is frozen, the IRS will automatically freeze future refund claims until the taxpayer files an undisclosed number of “legitimate” returns, the taxpayer advocate report says.
The IRS doesn’t notify taxpayers that their returns are being investigated for fraud. And even if taxpayers inquire about their refunds, IRS employees are usually barred from providing any information until six months after the taxpayer’s inquiry.
So, I file my taxes, expecting a big refund, or at one that I really need to pay the bills. The IRS decides that I might have lied on my tax forms, so they freeze my refund without telling me. If I call them up to find out what’s going on, they will refuse to tell me for six months. If I don’t try to find out what’s going on, they will freeze all of my subsequent refunds until I’ve sent them a number of tax returns that they think I didn’t lie on. How many tax returns? The IRS won’t say.
Seriously, how much money do they think they’re really recovering here? Enough to justify leaving thousands of families waiting for their refund out to dry?
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