IRS issuing ‘Surprise’ Tax Refunds to Almost Half a Million People

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What happens when you radically change how the IRS can and cannot rip money out of the checks of hundreds of millions of Americans with almost no warning at all? Well, the short answer is that they are liable to screw it up, as many Republicans warned in the early days of COVID19 when Democrats in the House shouted ‘we have to do SOMETHING’. Surely enough… they did. The IRS on November 1st announced that they will be sending out a ‘Surprise refund’ as some outlets are calling it to some 430,000 Americans who were illegally taxed on their extended unemployment payments during the 2020 Tax year. Yep. Oops. But wait it gets better, the 430,000 refunds were just the start.

When The IRS Has Says ‘Oops’, It’s A ‘Surprise’,

If You Do It… Its A Felony

According to the IRS’ press release,

“The IRS efforts to correct unemployment compensation overpayments will help most of the affected taxpayers avoid filing an amended tax return.

So far, the IRS has identified over 16 million taxpayers who may be eligible for the adjustment.

Some will receive refunds, while others will have the overpayment applied to taxes due or other debts.”

There’s screwing up… and then there is screwing up the taxes of 16 MILLION people. The agency goes on to explain, “The American Rescue Plan Act (ARPA) of 2021, enacted in March, excluded the first $10,200 in unemployment compensation per taxpayer paid in 2020. The $10,200 is the amount excluded when calculating one’s adjusted gross income (AGI); it is not the amount of refund. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.”

“Earlier this year, the IRS began its review of tax returns filed prior to the enactment of ARPA to identify the excludible unemployment compensation. To date, the IRS has issued over 11.7 million refunds totaling $14.4 billion. This latest batch of corrections affected over 519,000 returns, with 430,000 taxpayers receiving refunds averaging about $1,189.”

According to spendmenot.com in 2020, there were 593 tax evasion convictions in the US, in 2019 848 people were sentenced, and in 2018 — 1,052. Those were just the convictions, not the investigations and not the charges. Isn’t it funny how the IRS making a gargantuan accounting error makes for a third page story on a slow news day, but if you do it… it can ruin your life?

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