IRS Delays Causing Headaches for Millions
IRS delays are stretching out longer and longer as millions wait for tax refunds, according to a recent article in Accounting Today. Some frustrated taxpayers are still waiting for the tax agency to even process their tax returns, months after they filed.
Depressing Numbers
As of a month ago (July 31), the IRS had nearly 14 million personal tax returns yet to process. Returns filed on paper, including amended returns, are compounding the problem. Those have to be entered by hand, adding more delays. As of last reports, there is a backlog of 17 million paper returns.
What’s Going On?
Clients are calling their accountants, wanting to know why they haven’t received their refunds, or why the IRS hasn’t processed their tax returns. All accountants can do is list reasons why the IRS is so backed up.
First, the IRS shut down its offices for months in 2020 because of the pandemic. Next, the IRS had to ramp up suddenly to handle organize and disburse economic stimulus payments on top of its normal duties (475 million payments, to be more precise).
What about the folks who didn’t receive their stimulus payments? There are more frustrations in store for them, unfortunately. If you did not receive a payment, you can claim it as a tax credit when you file your return. But due to the number of fraudsters claiming it, the IRS has been flagging any tax return asking for the credit. That means the feds could pull aside a potential 8 million returns for extra scrutiny.
But wait, there’s more. Congress changed some tax laws after filing season had already started. Legislators decided the first $10,200 of each taxpayer’s unemployment payments would be tax-free. So now the IRS has to go over early filers’ tax returns, and send them a refund.
It’s kind of hard to feel sorry for the IRS. But Congress has given these extra chores to the agency while shrinking their budget, along with any hope to hire more help.
Any Good News About IRS Delays?
There’s one piece of good news. The government pays interest on late tax refunds. If you’re waiting out IRS delays, at least you’ll get a little extra cash for your trouble.
Links
Check out the original article from Accounting Today.
The IRS has a webpage to track your refund status.
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