There are many different reasons why the IRS may seize, refuse to send, delay or deny any Claim for Refund you have made. Any tax return you file is considered a "Claim for Refund".
Return Processing Errors
The IRS will send you an immediate Notice if you've made an error & your return cannot be processed. Usually, it's a failure to provide signature or a missing form. (See Letter 12C, Form 3531, Letter 2416C or Letter 143C)
Sometimes they think a social security number the return was wrong & they are holding your money until you straighten it out. (See Notice CP54)
If you send them a response, they may send you a letter similar to Letter 4314C, explaining that they are reviewing your evidence & will respond in 60 days. However, don't depend on them to respond within that time period. Remain vigilant & call the IRS if you have questions!
Sometimes, the IRS sends a larger refund than they should have & they'll ask for their money back with Letter 510C. If you fail to respond, they will send you a Letter 3414C informing you of the debt & your failure to respond. Eventually, they'll send your file to Collections to be enforced according to Law.
Claims for Refund
Sometimes, you file a return & the IRS accepts it initially. Then, you get a Notice CP18 stating they have delayed sending part of your money because they have "questions". (See also Notice CP05) Then, they may ultimately deny it partially (Notice CP20) or completely. (Notice CP49 or Notice CP92)
They may hold your refund until they "complete a more thorough review". If so, they will indicate the reasons with a Notice CP07. They may also send Letter 916C refusing to make a refund because your "supporting information was not complete."
Very often, a refund will get taken by the IRS to pay for you back taxes or for an ex-spouse. (Notice CP39 & Notice CP42) The IRS may take your refund to be applied to other Federal or State debt you owe. (Letter 3179C)The IRS seizes business refunds as well. (Notice CP138)
Each year, spouses refuse to file Married Filing Jointly because they don't want their money to be taken to pay for the other spouses back tax debt. Some of them have to apply for "Injured Spouse" status to get their money.
Another common ground for a Claim for Refund is when the IRS denies your refund completely or partially. (See Letters 105C & 106C)
Whenever the IRS has your money, you have a Claim for Refund. It is up to you to pursue it correctly. The IRS cannot help you.
Each of the above letters will have a different tactic. Furthermore, each year may have different strategies.
When the IRS takes your money, you can pursue a Claim for Refund. A Claim for Refund can be pursued in US District Court, not solely at the IRS level. Hopefully, you can resolve your Claim prior to Court, but at least you know the option exists.
If the IRS took your money because of back taxes then you'll have to determine if you owe it or not. Get your "Account Transcripts" which will tell you everything about your account. If so, explore your Collection solutions.
If the returns are filed, then determine if an Amended Return or a separate Claim for Refund (Form 843) is necessary. Either of these would be advisable if you need to initiate or make a further claim.
If an amended return is not necessary then you can pursue your seized money as a Claim for Refund, with all the avenues & remedies available to you.
So, in most instances you'll file some sort of Appeal, depending on whether the IRS is collecting from you or not. However, remember that you can always pursue your Claim in US District Court if necessary.
But, in all cases, you'll need to follow the procedure. Be sure to file all documents on time. Of course, if you have any questions or trouble please give us a call!
J. David Hopkins, JD, LLM