You would have been given a refund had you filed your 2011 tax return, but you never did. The IRS is holding onto $1 billion in unclaimed funds that will become the property of the federal government if tax filers don’t claim the funds before the end of the tax filing period. Over 1 million houses failed to file and are owed the money.
Tax payers have three years to file a return and claim funds that they are owed. The people that do not normally file when owed tax refunds are part-time workers or students who do not make much money and therefore feel they will not be getting a refund. But they pay more into the system than is required and therefore would have gotten a refund had they filed.
The Earned Income Tax Credit (EITC) is one big area of refunds that are not filed. These are refundable tax credits and therefore are given to filers that have not paid much into the system but have earned some income. In 2011 the EITC was as high as $5,700 if your family size was large enough. There have been stories about illegal immigrants gaining the right to file 3 years of returns to obtain three years of EITC. Those numbers are not yet included in this report by the IRS.
This weekend, shoppers in the state of Massachusetts will be getting a sales tax holiday on August 13 and 14, with a respite from the usual 6.25% sales tax 2011. This is the seventh time a tax-free weekend has been held in the state since 2004, and backers hope that consumers will be lured into the stores to spend in spite of the bleak economy.
The Massachusetts Department of Revenue says shoppers saved almost twenty million dollars during the 2010 tax holiday.
A representative of the Retailers Association of Massachusetts, John Hurst, says this tax 2011 holiday will help low income families with important purchases at this time of year. At $2.500, the cap in Massachusetts is more generous than that in many other states.
In Florida, the sales tax holiday in 2010 increased tax revenues by seven million dollars, because of more sales of taxable items. A study funded by the Florida Retail Federation found that August sales were $293 million more than they would have been if the sales tax holiday had not been in effect.
Rick McAllister of the Retail Federation says, “This works out great for everyone concerned. Shoppers win because the prices are lower, and the stores win because they make more sales. The state is a winner too because this tax holiday really provides an economic boost.”
The state Tax commission of Oklahoma says the sales tax holiday of 2010 saved consumers almost seven million dollars in sales tax.
Sales tax holidays are catching on across the United States in recent years. Seventeen states have tax 2011 holidays this year, usually during the month of August to help parents stock up on children`s clothing and school supplies.