- Jul 2011
If any of you happen to be caught up in this SNAFU, you have my sympathy and this should be a lesson to you about the ability of our federal government to screw up a good thing. It's also a good lesson on why the government should be scaled back drastically.It's perhaps the very definition of Red Tape. Four years ago, Congress decided that the IRS should get into the banking business, authorizing it to give out no-interest loans to first-time homebuyers. That put the agency in the position of both collecting loan payments and issuing tax refunds to the roughly 1 million taxpayers who took advantage of the program.
This year, the odd arrangement overwhelmed IRS systems, and an unspecified number of taxpayers have been forced to wait four months or more for their tax refunds. In fact, many are still waiting.
"This is frustrating for taxpayers, and it's frustrating for us," said IRS spokesman Terry Lemons. "We deeply apologize."
Making matters worse, taxpayers caught up in the vortex say they've been promised delivery dates for their refunds repeatedly, only to be disappointed or to discover their returns have been placed back into "error" status.
read more at: Red Tape - IRS snafu leaves taxpayers, refunds in limbo for months
BTW, at the end of the article is a very good tip:
RED TAPE WRESTLING TIPS
Many consumers enjoy the rush of a large tax refund check and use their regular payroll deductions as a kind of forced savings plan. That's a bad idea.
This Red Tape tale is a good reminder to all that now is a good time to double-check your regular payroll deduction. There is no good reason to overpay federal taxes during the year in order to build up a large tax refund. That amounts to no-interest loan to the government, and you are better off keeping that money throughout the year and putting it in the bank yourself. Obviously, it's better for you to receive the interest, rather than Uncle Sam. But perhaps more important, in an economy where even Standard & Poor's is beginning to doubt Washington's ability to pay its bills and where the federal government faces threatened work shutdowns annually, it's bad to trust your money to the whim of Uncle Sam. In the past, state governments have delayed issuing refunds to help close budget gaps — it's not unthinkable that Congress could try that someday.
If you received a large refund this year, that's nothing to celebrate. You should adjust your payroll withholding accordingly, ASAP.