Tax season is almost always challenging — there’s a reason people hate doing their taxes so much! But the last two years have been unusually difficult, all thanks to COVID-19.
As with businesses across the world, the IRS too has had to make changes and cope with delayed deadlines, as well as health-related shutdowns, that have together created a backlog and processing problems for the agency.
Americans are now facing delayed tax refunds because the IRS is holding 29 million tax returns for manual processing, according to the National Taxpayer Advocate’s (NTA’s) office. Many of our clients have also faced unexpected delays. Typically, the agency gets returns out to people within 3 weeks of filing.
This year, however, the IRS is still dealing with a backlog of paper tax returns from 2019 that could not be processed in time because of the pandemic and subsequent office closures. These have to be processed by hand, which stresses already overworked taxpayers further.
In addition, the pandemic has also caused an increase in workload by catalyzing new laws and changes that the IRS has to manage in addition to normal workload.
So why is the IRS holding so many returns to be handled by hand? 5.3 million 2019 and 2020 returns, thus far, have been submitted as paper forms. Of course, these HAVE to be manually entered into the IRS system. What about the rest though?
8 million returns are being personally inspected by the Error Resolution System (ERS) unit of the IRS. Many of these are Recovery Rebate Credit (RRC) claims. These claims were filed by people who either did not receive their stimulus payment at all or did not receive the complete payment. Other ERS filings are also being more closely inspected to verify income for taxpayers who used their 2019 income instead of money made in 2020 to claim credits.
Besides this, another 4.7 million returns are being inspected because of either errors or fraud identification issues. Additionally, 11 million business returns are also being manually processed by IRS staff.
As a tax preparation company, we currently have many clients who expect to receive refunds but have seen no signs of them yet. Worse, it is harder than ever to get through to the IRS this year. Tracking refunds is difficult and annoying, and it simply adds to taxpayers’ frustrations.
According to the NTA, the IRS has received 300% more calls this tax season. For calls made to the IRS, it has been officially reported that the IRS has a “Level of Service” of only 5% — meaning very few calls actually get through! Once you DO make it through, however, it’s not all smooth sailing — taxpayers then report an average wait of 20 minutes.
For now, the best way to track refund status remains the IRS’ online tool: Where’s My Refund? The usefulness of this tool, however, remains limited.
It’s not ALL doom and gloom this season with the IRS, however. The agency has still managed to process more than 91 million 2020 1040 forms. It has also distributed more than 159 million economic impact payments, issued more than 68 million refunds, and made adjustments to its systems to handle unemployment changes and EIP balance dues almost automatically.
As for the 29 million still waiting for the IRS to process their return? There’s really nothing to do but wait.
What about the ones who still haven’t filed their return? We understand — nobody wants to file their taxes. It’s one of the most stressful and annoying things to do. But we have your back! Let us take your tax-related stress away this year and handle it all for you — all you have to do is book a FREE appointment to get started: https://msgsndr.com/widget/booking/kIWnLZ6tnIKZ5fZ6akhN
Don’t leave it too late — there are less than three weeks left before the May 17 deadline!
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