How Long Can the IRS Hold Your Refund for Review

How Long Can the IRS Hold Your Refund for Review

For many people, tax season is a time of anticipation as they await their federal tax refund from the Internal Revenue Service (IRS). However, sometimes a tax return may be flagged for review, which can prolong the waiting period. In such situations, it’s natural to ask, “how long can the IRS hold your refund for review?” This article aims to address this question and provide you with a comprehensive understanding of the IRS review process.

When Does the IRS Review a Tax Refund?

There are several reasons why the IRS may hold a tax refund for review. These include discrepancies or errors in the tax return, claims for certain credits like the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), a history of tax-related issues, or a random selection for a routine audit.

How Long Can the IRS Hold Your Refund?

As a general rule, the IRS has 45 days from the date of the acknowledgment of the return (typically dated from the acceptance of your e-filed return or the postmark on your mailed return) to issue a refund without owing the taxpayer interest. This timeframe is often much shorter, with most taxpayers receiving their refunds within 21 days of filing.

However, if your return is flagged for review, the process can take longer. In many cases, the IRS resolves tax issues within 90 days, but complex cases may require additional time. Moreover, if the review escalates to a full audit, the process could take several months or even a year.

During peak tax seasons, the IRS might also experience delays due to the high volume of returns. Unexpected events like government shutdowns or public health crises could potentially add to these delays as well.

What Should You Do If Your Refund Is Under Review?

If your refund is under review, the IRS will usually send a notice or letter explaining the reason for the review. It’s important to respond to this letter promptly, providing all the requested information. Delaying or neglecting to reply can extend the review process.

Keep track of the dates. If the IRS holds your refund for an extended period without issuing it or providing a valid reason, you may be entitled to receive interest on the refund.

You can check the status of your refund using the IRS’ “Where’s My Refund?” tool, available on their website and via the IRS2Go mobile app. The tool provides personalized, real-time information about your refund status.

Conclusion

While waiting for a tax refund under review can be stressful, understanding the process can help mitigate some of the anxiety. Remember, the IRS has rules about how long they can hold your refund. If you’ve been waiting for an extended period, don’t hesitate to contact the IRS directly or seek the help of a tax professional to resolve the issue.

Remember to file your tax returns accurately and thoroughly to reduce the chances of a review or audit. And when in doubt, consult with a tax advisor to ensure your tax filing is in order. Remember, patience is key in these situations as the IRS works through the review process.

By Carol Cooperman