Tax returns are piling up at the Internal Revenue Service, and millions of taxpayers are experiencing refund delays beyond the typical 21 days or fewer for e-filed returns electing a direct deposit refund. The IRS even issued a press release cautioning taxpayers not to count on getting a refund by a certain date, especially when making major purchases or paying bills.
On its operations page update today, the IRS posted that as of March 25, it had 7.2 million unprocessed individual returns, including 4.9 million with errors or needing special handling (paper returns, for example). Both numbers have ticked up since last week by 200,000, suggesting that more returns are going into the “to do” pile as tax day nears.
The good news is that the latest tax filing statistics as of March 25 show that the IRS has processed nearly 79 million individual tax returns and issued nearly 58 million refunds, averaging $3,263. So lots of returns are going through smoothly.
“People are always trashing the IRS technology, but the technology is what’s working best,” says Mark Everson, former IRS commissioner and vice chairman of alliantgroup. “If you file a clean return and ask for a direct deposit refund, you’re going to get it quickly. Where they’re struggling is those things that require human intervention.”
Waiting for a refund? The best way to check on the status is with the IRS Where’s My Refund? tool. You’ll need to plug in your Social Security number, filing status, and expected refund amount. A “refund status results” bar gets filled in as your return moves through the process: return received, refund approved, refund sent.
Just because you look one day and see “return received,” that doesn’t mean you’re in the clear. Instead of moving on to “refund approved,” the Where’s My Refund? page can flip to show this message: “We apologize, but your return processing has been delayed beyond the normal timeframe.”
What does that mean? A manual IRS review may be necessary when a return has errors, is incomplete or is affected by identity theft or fraud. What kind of errors? It could be anything, but it’s likely the message is coming up because of the common confusing issues this year of reconciling advance economic stimulus payments and/or advance child tax credit payments, says Claudia Hill, an enrolled agent in Cupertino, Calif.
There’s really nothing you can do at this point, but recognize that “you’re caught in delayed processing purgatory,” she says. In some cases, the IRS says, this work could take 90 to 120 days (13 to 17 weeks). And it’s taking more than 20 weeks to process amended returns.
The 4.9 million returns include prior year returns too, so some taxpayers are still waiting for their 2020 tax year refunds. There’s the backlog of returns, a backlog of correspondence, and the fact that it’s hard for tax pros to reach the IRS by phone.
“The IRS has it in its power to correct the backlog, and they need to do that because it compromises the integrity of the system,” says Everson. “I’d like to see them bring everybody back into the office now, and everybody except criminal investigators should be addressing backlogged returns.”
The IRS has been shifting employees from other duties to help address the backlog and delays. It’s also hiring.
Further reading:
IRS Temporarily Halts These 10 Scary Taxpayer Letters
IRS Nixes 10-Year Stretch For Most Inherited IRAs