If you received correspondence relating to a filed US tax return, that denied a refund, there may be several reasons why this has happened.
Just Breve regularly receive queries relating to issues with self prepared tax returns, where the "IRS refusing to issue my tax refund" or the "IRS have denied a refund claim due to an error" on the return as the taxpayer self prepared and made a mistake or multiple mistakes.
What types of issues cause the IRS to deny a refund?
There are a multitude of reasons. We list several here for you:
- No US tax number listed on the return - ALL US tax returns require a US tax number. This is either an SSN or an ITIN. The latter, an ITIN, is normally issued for non residents of the US, who are filing a US tax return or meet one of the limited exceptions to filing one. In the case of a US 1040NR US tax return filing, an ITIN is compulsory, as they WILL NOT issue a refund without it.
- ITIN is expired. Where an ITIN has not been used on a US tax return, at least once every 3 years, the ITIN number expires for filing purposes. This includes a refund being issued. The IRS will deny the refund until the ITIN is renewed.
- Tax document missing - all refunds require the relevant tax document, showing the US tax held to be attached to the tax return. Else the IRS will not issue the refund. The tax documents include Forms 1042-S, 1099-DIV, 1099-INT, 1099-B, 8288-A and 8805.
- Cannot locate the tax - the IRS will use the above tax documents to locate the tax. If the refund is above the threshold of $4,498, the IRS will allow themselves an additional 6 months to locate the tax. A letter from them is normally sent out stating this, which some people confuse for a denial of the refund. All it means is, the refund will take longer to be issued.
- Mis-Match on the name versus the tax number or incorrect ITIN number on the tax return - the IRS will issue a letter where there is a mis-match on the details provided to them. A response form is normally enclosed for the taxpayer to reply. Ideally enclosing a copy of the CP565 ITIN notice to confirm the correct name and ITIN number as assigned by the IRS, is recommended. Again, this will cause a delay in the refund due to IRS processing delays and response times being slow.
- Incorrect tax treaty claim - the IRS may deny if the correct treaty section was not listed on the tax return. Again, a response form or a letter would then need to be sent to the IRS to correct the return and quote the relevant section of the tax treaty you were claiming.
The above is not exhaustive, but an example of rejections we have seen. There can be a multitude of reasons for the denial. It is best to discuss this with a professional.
Just Breve would need to review both the IRS letter received and the US tax return filed. As part of the process for any resolution, we would be required to have you sign a power of attorney with the IRS, so we are able to discuss the issues with them.
Contact Just Breve for more information:
Just Breve - is a US tax accounting firm, assisting non US persons with their US tax filing requirements, including obtaining a refund of overpaid US tax. This includes applying for a new ITIN or renewing an existing ITIN. We are a certifying acceptance agent (CAA) and have a contract with the IRS to help with Form W-7 ITIN applications.
T: 0208 1444632
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