Economix blogs about some IRS data showing that 1.4 million people have not claimed more than $1.3 billion in 2006 tax refunds. So who would leave money on the table?The IRS says they are people who have money withheld from a paycheck but make too little to require filing a return. One possibility is they are seniors who have money withheld from their social security benefits but die that year. The IRS will send out a refund to a deceased’s spouse. But if none exists, the IRS keeps the money unless another relative claims it.
Start by plotting the raw number of refunds versus the raw number of seniors? (Yes, this is risking the ecological inference fallacy) There is a very strong relationship, even excluding California, which has the most seniors and the most unclaimed refunds. So maybe they are dead? One problem: The states with the most number of seniors–which aren’t plotted–are also the largest states (no surprise).
What about the number of unclaimed refunds per 100,000 people in a state versus the percentage of senior citizens (over age 65) living in a state. Now it’s a strongly negative relationship, even when excluding Alaska, which has very few seniors and lots of unclaimed tax returns.
So for now, who is leaving money on the table remains a mystery. Could they be frequent movers? Lower income filers? There are lots of possibilities. What are your thoughts?