What to do now?--Form 8888 I-Bond Purchase Request Ignored by IRS

No, there is no way to correct this as you have already purchased the maximum allowed amount of I bonds for this year. 

The $10,000 per person per year cap applies to all your I bond purchases whether through Treasury Direct or your tax refund. 

The Treasury Department has not curtailed the purchase of I bonds. 

Thank you JulieS for this prompt response. I respectfully beg to disagree.  Do you have a reference from the Code of Federal Regulations or similar authoritative source for your statement cited just below?

"The $10,000 per person per year cap applies to all your I bond purchases whether through Treasury Direct or your tax refund."

I conducted further research in the electronic code of federal regulations (ecfr.gov) and found the following citations:

Furthermore, your statement is contradicted by the following quote from the Treasury Direct web site:

Quote

How much in I bonds can I buy for myself?

In a calendar year, you can acquire:

• up to $10,000 in electronic I bonds in TreasuryDirect
• up to $5,000 in paper I bonds using your federal income tax refund

Two points:

• The limits apply separately, meaning you could acquire up to $15,000 in I bonds in a calendar year
• Bonds you buy for yourself and bonds you receive as gifts or via transfers count toward the limit.

Unquote

link:https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ibuy.htm#myself

If my citations from the Code of Federal Regulations are authoritative and germane to my circumstance, I'm still left with what to do to get my paper I-bonds issued with my federal tax refund amount.  I'm also concerned the IRS potentially has a systemic Form 8888 processing problem.  Does TT have a good communications link with cognizant IRS officials to address potential systemic problems with taxpayer refund processing errors?

Thank you for considering my rebuttal, my follow-up query, and, JulieS, I wish you the best always.

Yes, you are correct, you can purchase up to $5000 of paper I bonds with your tax refund and that is in addition to your electronic bonds purchase. 

I assumed that since you can't purchase paper I bonds any other way now, that would effectively eliminate the $5000 limit. 

As far as why your Form 8888 election was not processed, I found this on the Treasury direct website:

"If the IRS encounters errors on a return (refund amount is calculated incorrectly, IRS Form 8888 is completed incorrectly, requested amount is not a multiple of $50, etc.), the bond purchase will be cancelled and the full refund amount (if any) will be delivered to you."

I am not sure why you didn't get your bonds, but Treasury Direct says to call 844-284-2676 if your refund was processed and you didn't get your bonds. 

Anyone figure out what to do about this?

I have the same problem.  They just ignored my request and sent me a direct deposit refund.

So maddening.

I have not maxed my electronic purchases this year so that's not it, even though I agree with the reasoning that that shouldn't be a problem anyway.

Tried to call the IRS and just get the message that the wait time is so long, don't even bother, try another day.

They didn't buy an i bond for us either.

In the irs2go app it said (generic form message) that they didn't buy a bond because we had a past obligation due (not sure that's the case, and even if it was, there was enough money to buy the i bond) or because the amount was not a multiple of $50 or was over $5,000 (unlikely). 

I called the above # that Julie provided and eventually navigated to be able to reach a person. The outgoing message said estimated wait time is 2 hours or more. I found no option to leave a number to be called back. I hung up.

I called a standard IRS number twice before that, and it just gave me an automated menu with no way I could tell to reach a person. That # was: Individuals [phone number removed]   7 a.m. to 7 p.m. local time https://www.irs.gov/help/telephone-assistance

I contacted Treasury Direct, and not surprisingly they told me to contact the IRS.

Here are 3 options but I don't know if they'll work:

1.Contact the IRS by phone (at the 1040 # above), which likely won't work. I didn't find a way to email the IRS.

2. Make an appointment at a local IRS office. Apparently there's a difference between a TAC and a TAS office. Here's for the TAC: https://www.irs.gov/help/contact-your-local-irs-office

3. You can submit a case to the IRS's Taxpayer Assistance Service (TAS) I think by phone, and definitely by fax or mail. If enough of us do this, maybe they'll fix the system, or maybe at least we can buy the bond after all somehow, like they'll make an exception to the 10k limit if necessary because it was the IRS's fault. The IRS should call the taxpayer if there's a question about buying the i bond instead of just refunding the whole amount. https://www.taxpayeradvocate.irs.gov/contact-us/ or https://www.taxpayeradvocate.irs.gov/wp-content

/uploads/2022/04/CaseAcceptance_040422.pdf All in person TAS offices are closed per https://www.irs.gov/advocate/local-taxpayer-advocate.

Good luck. Hope this helps.

I am in the same boat.  Unable to get through to IRS.  Treasury Dept Retail Sales Section has a very long "press this" menu where none of the options apply.  I will try Taxpayer Advocate.

My return with I-bond request is still processing, but this thread worries me.  I'm wondering if it has anything to do with the names for the bond registration.  The IRS instructions say use only first name then last name.  I also named a beneficiary and put a checkmark.   So I'm kinda on edge until I see what happens.

Also in instructions:

"Your entire deposit may be deposited in one account. If there are any delays in the processing of your return by the IRS, your entire refund will be deposited in the first account listed on Form 8888. Make sure the first account you list on Form 8888 is an account you would want the entire refund deposited in if this happens."

Same boat here - I had form 8888 completed with my online return and I looked today and I am receiving 100% of my refund to my bank account. 

this is what I see on the IRS website re: refund status 

You requested that part or all of your refund be used for a US Savings Bond(s) purchase. However, we could not honor your request for the savings bond purchase due to one or more of the following reasons:

• The bond amount you claimed was not in a multiple of $50 or it exceeded $5,000.
• You owed a past due obligation to which we applied part or all of your refund.

The bond amount was an even amount (divisible by $50.00 yet under $5k) to be used for a bond purchase with my refund. I am a little frustrated as to why my refund processed so easily in Turbotax and nothing was raised where the bond purchase would not materialize. Wonder how many others have this same problem and if it is a turbotax issue or an issue where treasury direct has been so busy the past few weeks they ran out of capacity to process these requests. Either way it stinks. 

In my case, the WMR site said the bonds would be issued, and the refund balance sent to me.  I ended up sending the Tax Advocate all my documentation, and will now wait (probably a long time) to see what happens.  In the meantime, I'm missing out on the I Bond rate of 9.62%

Exactly same happened to me! I always over pay my tax and they refunded all without issuing the paper Ibond.

And yes, the same thing happened to me.

I would like to know what recourse I have available now to rectify their error.

I tried calling the helpline yesterday and it would not even allow me to be put on hold because they recorded message said they had too many calls.

What a pain!

Upon further investigation, I discovered the answer in the IRS Form 8888 Instructions.:

"You may request up to three different savings bond registrations. However, each registration must be a multiple of $50, and the total of lines 4, 5a, and 6a can’t be more than $5,000 (or your refund amount, whichever is smaller)."

Our problem is that the total on our JOINT return was $5000 for myself and $5000 for my spouse, which when totaled ($10,000), exceeds their $5000 limit in totality. 

So if you filed jointly and asked for $5k each, they won't do it. They limit it to $5K per return filed.

Here's an update on my own situation:  The Tax Advocate advised me that the IRS declined my Form 8888, which it flagged as possible Identity Theft due to (1) my large total refund, and (2) the fact that this request was inconsistent with how I had chosen to receive my refunds in previous years.  She went on to say that she had received several similar claims from other taxpayers.

Unfortunately, she does not know why the IRS did not notify me and thus give me a chance to prove my identity, but instead just did a direct bank deposit of the gross refund.  She further advised that there was nothing that could be done at this point to rectify this.

I will say that my experience with the Taxpayer Advocate was a friendly, professional, and timely one; although the outcome was other than I had hoped for.  Reading between the lines, it sounds like the IRS wasn't prepared for the increased Savings Bond demands due to the unusually high interest rates and extensive publicity re using tax refunds to purchase them.  As a result, their existing checks and balances to weed out fraud caught some of us innocents!

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@ SweetieJean

 wrote:

Here's an update on my own situation:  The Tax Advocate advised me that the IRS declined my Form 8888, which it flagged as possible Identity Theft due to (1) my large total refund, and (2) the fact that this request was inconsistent with how I had chosen to receive my refunds in previous years.  She went on to say that she had received several similar claims from other taxpayers.

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Sorry that happened to you.  ☹️   Frustrating indeed, when you did absolutely nothing wrong.   I'm glad the Taxpayer Advocate Service experience was a positive one in terms of helpfulness, even if they couldn't actually change anything.

IMO, the IRS didn't think that through well.   That would be a dumb way for an ID thief to steal part of a refund, since the I-bonds cannot be cashed by anyone for at least a year.  And even after a year, additional notarized/verified ID is required when cashing it.  

In the future, I wonder if having a voluntary IP PIN would be helpful  in a prophylactic sense.  Then the IRS would always know it was indeed you filing the return, no matter how large the refund, or whether or not I-bonds were selected.  Of course, as you know, that would obligate one to using a new IP PIN every year after that, too.

do know that you can go online and buy up to $10,000 of I-Bonds for yourself.

https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm  

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@ Mike9241

 wrote:

do know that you can go online and buy up to $10,000 of I-Bonds for yourself.

---

That's indeed true for someone who has not yet met the annual $10,000 per-person limit in electronic I-bond purchases.   This year, however, there is a large number of people who have already maxed out their annual Treasury Direct electronic purchase and who want the additional $5,000 in paper I-bonds through the Federal refund.  Demand is high due to the high interest rate caused by the soaring inflation rate.  Every little bit helps soothe at least some small portion of the inflation sting.   The demand for the paper I-bonds has been enhanced this filing season by a large number of economic news articles touting them, and some folks made a $5,000 extra tax payment (such as an excessive extension request payment) just to get them.

The irony of all this is that I made a $5,000 estimated tax payment online at the end of 2021 just so that I could claim $5,000 worth of my refund in bonds.  I doubt an identity thief would go to that measure, and then wait weeks (or months) for the bonds.

and yes, I had already purchased $10,000 of bonds electronically using my Treasury Direct account.  The Tax Advocate told me that many of the others she was helping had done the same.

I have a related problem.  I too filed a Form 8888 I Bond Purchase of $5,000.  My total return credit was $7,200.  I chose to get the $5,000 refund to pay for the I Bond and the rest I chose to roll it over until the next year.

Instead I get a letter from the IRS stating the Direct Deposit of $5,000 on Form 8888 does NOT match the refund amount.  Therefore the I Bond Purchase was disallowed.

Today I got a check for $5,183.   Now get this THE REASON THE REFUND OF $5,000 DID NOT MATCH FORM 8888 WAS BECAUSE THE IRS ADDED INTEREST DUE TO THEIR DELAYING PROCESSING MY ACCOUNT.  Instead of adding the interest of $183 to the rollover amount, they added it the refund amount.  So the I BOND request gets rejected because the numbers do not match.   The IRS botched it up, not me.  So here I am out of an I Bond due to the IRS delaying processing my return.   

  That is simply crazy, incompetence at its worst.  What do I do now? 

Nothing you can do.

Eat it and try again next year.

And/or move to a country where your tax dollars actually get you something.

So true.   Due to an IRS administrative error I was out of a $5,000 I Bond that should have been earning interest since last October.  That is about $350 lost interest so far.  Since I can't purchase this bond directly , I lost the opportunity to get this bond.  That will amount to thousands of dollars of lost interest over the years.

I tried to contact the IRS.  You cannot get through to a live person.  If you are lucky enough to even get to be put on a "over 60 to 90 minute hold" chances are your phone will be disconnected after waiting for 45 minutes or so.  It happened to me twice now. 

One time I did get through and the agent said this is a "tax law" question. Huh?  It was an administrative error.  Then he said I was ineligible, not true.  Got nowhere with the agent but they did connect me to the tax law department.  I asked for a direct number and they didn't have one.  The transfer went through; it was a 60 minute wait.  After 45 minutes the line was disconnected. 

For future reference I suggest you don't file manually in the future.  It took 8 MONTHS for the IRS to process my manual return.   When I contacted an agent two months ago they said it was due to covid.  Huh?  Odd as I live in California, one of the worst hit states from Covid, and they processed my return quickly.   Sadly the office is filled of ignorant and incompetent people that can only answer basic questions.    

I had a similar problem, and contacted the Tax Advocate. She said that the IRS did this to a number of other taxpayers, but that nothing corrective can be done.

However, if you have not already purchased $10,000 in I Bonds this year, you can use your refund to do so by setting up a Treasury Direct account.

Thank you Jean.  It just doesn't seem justice was served.  I bet every individual who wanted to purchase an I Bond was rejected because of an IRS error of adding interest to the refund amount without your knowledge.  As I mentioned this opportunity to acquire this I Bond is lost forever as I have already purchased $10,000 directly from treasury.gov   We are maxed out at $10,000.  The only way you can get an additional $5,000 is through your IRS refund.  

It boggles my mind why this IRS mistake can't be corrected.  It is what it is I suppose. 

Congress really makes the tax laws not the IRS. write your Congresspeople.