The Treasury Inspector General for Tax Administration says the IRS held about 38,824 high-priority nonfiler cases in first-notice status for more than a year, while TIGTA estimated about $321.3 million in recoverable tax among them. Separately, the IRS says refunds on returns that were never filed become the property of the U.S. Treasury once three years pass. The two rules bear on the same group of people: those with returns still unfiled.

TIGTA’s report, number 2026-308-047, was issued Aug. 31, 2026. It covers the IRS Small Business/Self-Employed Division’s handling of nonfilers across tax years 2015 through 2022, and the IRS agreed with all six of its recommendations.

What TIGTA found on the stalled cases

According to the TIGTA report, 38,824 cases covering 33,653 taxpayers sat in first-notice status as of June 30, 2025, with about $15.7 billion in potential tax. Collection management had asked for the delay in March 2024 because of resource concerns. The IRS moved the cases forward in March 2026.

TIGTA estimated that 10,482 of those cases, involving 9,119 taxpayers, could yield about $321.3 million in additional tax if enforcement continued. Another 10,969 cases sat unassigned in a queue. The report counted 4,918 cases where the return was filed before the first notice went out, and said the IRS sent first notices to nearly 5,000 taxpayers who had already filed.

People who really do have a past year unfiled face two clocks at once. One is the IRS nonfiler program, which TIGTA says is sending more notices. The other is the three-year refund limit, which matters most for those who were owed money. The first can bring a bill. The second can quietly take a refund.

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Notices are rising even as staff shrink

First notices rose from 847,000 in fiscal 2024 to 2.4 million in fiscal 2025, and final notices rose from 533,000 to 1.7 million, the report says. At the same time, the IRS workforce fell from about 103,000 in January 2025 to about 74,000 in January 2026, a 30 percent drop. TIGTA said the agency generally puts balance-due cases ahead of nonfiler work.

TIGTA also put a price on the problem. It projected a gross tax gap of $696 billion for tax year 2022, with about $63 billion, or 9 percent, tied to nonfilers. In a Sept. 3 bulletin, the watchdog said potential nonfilers rose by 5.9 million over tax years 2015 through 2022.

For ordinary filers, the notices are the part that arrives in the mailbox. The report says some people who received a first notice had in fact filed, so a nonfiler letter does not always mean a return is missing. Anyone who gets one and has already filed should keep proof of filing and answer the letter with it.

The three-year limit on refunds

Not every unfiled return means a bill. Some people who skipped a year were owed a refund, and the IRS rule works against them. In release IR-2026-37 on March 20, the IRS said taxpayers generally have three years to file and claim a refund. “If they do not file within three years, the money becomes the property of the U.S. Treasury,” the release says.

That release counted more than 1.3 million people with unclaimed refunds for tax year 2022. The state table totals 1,322,600 people and about $1.2 billion, with a median refund of $686 before credits. The deadline for those 2022 returns was April 15, 2026, so that year’s money has now passed to the Treasury.

The same three-year rule applies to other tax years, but the March release gives the date only for 2022. Anyone with a later year still unfiled has a deadline of their own, and the release does not list it, so the filing date for that year is the number to pin down first.

What else rides on an old return

The IRS release lists more than the refund itself. Low- and moderate-income workers may qualify for the Earned Income Tax Credit, which for 2022 was worth up to $6,935 with qualifying children. A 2022 refund can also be held if the 2023 and 2024 returns are unfiled, and it can be applied to amounts owed to the IRS or a state agency, unpaid child support or other federal debts such as student loans.

Missing paperwork is rarely the barrier. The IRS says anyone missing a W-2, 1098, 1099 or 5498 can request it from the employer, bank or other payer. A free wage and income transcript is available through Get Transcript Online, which the release calls “by far the quickest and easiest option.” A transcript can also be requested by mail with Form 4506-T, though the IRS warns that takes several weeks.

TIGTA found the agency slow to chase some nonfilers, yet its notice volume is climbing. The refund deadline, by contrast, does not wait for a letter. For someone with an old return still unfiled, the open question is which year’s three years run out next.

Still holding an unfiled return and a possible refund?

A refund on a return that was never filed is lost once three years pass, and the IRS may also hold a refund while later returns are missing. A nonfiler notice adds pressure, but the refund deadline keeps running whether or not a letter ever arrives.

The IRS Refund Recovery Kit sets out the 3-year refund deadline in plain steps, alongside a refund status tracker spreadsheet for following a refund once a late return is in. It also covers the Form 3911 trace steps if a check goes missing. The kit is 20 pages.

Get the 3-year refund deadline guide for unfiled returns →

This article was produced with AI assistance and edited for accuracy against the sources linked above.