It seems that a lot of people think this one is true. In 2010, the IRS announced that 1.4 million people, who were due a refund, still hadn't filed their income-tax return for the 2006 tax year. The IRS was trying to deliver the $1.3 billion in refunds that these people were owed. That's a medium unclaimed refund amount of $604 [source: Herman].
The law allows most taxpayers three years to file a return to claim their refund. If no return is filed, the money belongs to the U.S. Treasury.
While there are no penalties for filing a late return that qualifies for a refund, you're required to bring your filings up to date. Taxpayers seeking a past due refund will find that their check will be held if they haven't filed their more recent returns as well [source: Herman].