According to an audit by the Treasury Inspector General for Tax Administration (TIGTA), the IRS has retained approximately $4.75 billion in excess payments from taxpayers who failed to file returns within the legally mandated deadline. Meanwhile, U.S. Customs and Border Protection (CBP) announced that tariff refunds—stemming from Supreme Court rulings against Trump-era duties—may take up to 45 days to process once their new claims portal is operational.

IRS keeps billions in overpayments due to filing deadlines

The IRS's refund statute imposes strict deadlines on taxpayers seeking to reclaim overpayments. If an individual or business submits a payment but fails to file a tax return within the designated timeframe, the IRS moves those funds into an "excess collections" file, effectively locking them away. TIGTA's audit revealed that this process has led to $4.75 billion in taxpayer funds being permanently withheld—money that could have been returned if filers had acted in time.

Critics argue that the IRS does little to proactively notify taxpayers of these looming deadlines, leaving many unaware that they are forfeiting their right to reclaim funds. While refunds are typically issued as a courtesy for errors or misapplied payments, the agency maintains that no refunds will be granted for payments where the statute of limitations has expired.

CBP's delayed tariff refund system faces scrutiny

Separately, U.S. Customs and Border Protection (CBP) is under fire for delays in processing refunds for importers who paid tariffs later deemed unlawful by the Supreme Court. In a Tuesday court filing, CBP official Brandon Lord stated that the agency's new refund claims portal is 60% to 85% complete but warned that refunds could take up to 45 days to process once the system goes live.

The refunds stem from tariffs imposed under the International Emergency Economic Powers Act (IEEPA)—a Trump-era policy the Supreme Court struck down in February. However, the Court did not provide guidance on repayment logistics, forcing CBP to develop its own system. Initially, the agency aimed for an April launch, but technical hurdles have pushed back the timeline.

CBP says it is prioritizing refunds for customs entries liquidated within the past 80 days, as well as those under "suspended, extended or review" status. While most refunds will be issued electronically, CBP acknowledged that exceptions may require alternative payment methods.