The Internal Revenue Service (IRS) recently announced that it is holding $950 million in unclaimed refunds for tax year 2012. Maybe... This is not the first time the IRS has used a large estimated refund figure hoping to entice the public to file their missing tax returns. Last year’s estimated refund figure for tax year 2011 was more than a billion dollars.

If you are enticed by the large refund figure, unfortunately the IRS doesn’t have a large stack of $950 million designated for taxpayers to just pick up. However, if you are owed a refund for tax year 2012 and you fail to file your 2012 tax return by April 18th, 2016, then your refund is forever gone. That’s not an exaggeration.

Unfortunately, there is a three-year window by which you can claim a tax refund from the IRS. If the IRS really cared about the estimated $950 million being not refunded to the public, I’m sure it would have promoted the deadline sooner than just more than a month before the looming deadline.

According to IRS Commissioner John Koskinen as quoted in the IRS press release, “We especially encourage students and others who didn’t earn much money to look into this situation because they may still be entitled to a refund. Don't forget, there’s no penalty for filing a late return if you’re due a refund.”

The large estimated refund amount that was publicized was calculated by an estimated median refund potential of $718 and an estimated 1,037,600 returns that need to be filed. The IRS estimates 94,900 IRS returns in California returns need to be filed with a median estimated refund of $656.

If you are not due a refund, the IRS has a process for that scenario too, even if you don’t file your tax returns. If you don’t file a tax return, the IRS may file a tax return for you, assess a balance against you, and pursue you for the assessed balance. This is called a substitute for return. Additionally, collections on the substituted balance may continue against you even if you eventually file your missing tax return.

So, even if you were tricked into eventually filing your tax return by a likely exaggerated estimated refund figure, filing your missing tax return is still likely a good idea.

Christian Montgomery is a West Sacramento resident and a tax attorney at Montgomery & Wetenkamp, Tax Relief Attorneys, located in Sacramento and Modesto. For more information regarding tax matters contact Montgomery & Wetenkamp at (916) 452-7033 or online at www.mwattorneys.com. This article is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.