IRS Delays, Explained
Imagine calling someone for help on a very important issue, waiting on hold for half an hour or more, and ultimately having only an 11% chance of talking to someone.
Unfortunately, this nightmare scenario was very common for the 282 million taxpayers who called the IRS during 2021. In addition to having an abysmal record with taxpayer phone calls, the IRS is also running behind on processing some 24 million tax returns.
Some taxpayers have ended up waiting nearly a year for their refunds.
It’s no wonder that the IRS has become the poster child for slow government bureaucracy. It has been chronically underfunded.
After taking inflation into account, some estimates show a 20% decline in the IRS budget over the past 12 years. As one might expect, when an agency budget shrinks, its manpower does as well.
The IRS estimates that it has lost nearly 20% of its workforce since 2010. Of course, neither the agency’s responsibilities nor the pool of taxpayers have decreased proportionally. The COVID-19 pandemic has only made life harder for the IRS, as it has for the rest of us, and the IRS is now responsible for processing Child Tax Credits and Economic Impact Payments (commonly known as stimulus checks). As always, the tax code is an evolving beast to be reckoned with and the outdated equipment used at IRS facilities doesn’t help either. All these elements have added pressure to the IRS during this tax season.
As we all know too well from our own jobs, adding to the workload while subtracting staff often results in a slower output. Indeed, the IRS was recently on the verge of becoming even more inefficient due to their plan to close their processing facility in Austin, Texas. It’s one of only three remaining physical processing centers since the IRS closed their processing center in Fresno, California in September 2021.
Thankfully, pressure from Congress and various unions managed to keep the Austin center open, but the point is, the IRS still only has three tax processing centers to serve the entire United States.
The agency estimates that 8 in 10 taxpayers file their tax returns online, which certainly helps speed up tax refunds. Someone who filed their taxes electronically should receive their refund within 21 business days if there were no issues with their return (although, due to the aforementioned factors, it can certainly take longer). The IRS has warned that those who submit paper tax returns can expect to wait 6-8 weeks (or more, of course) for their refunds… assuming there are no errors on the tax return.
Errors on tax returns, whether filed electronically or on paper, can result in significant processing delays.
Any error, no matter how small, can trigger further review by the IRS.
Tax refunds can be held up for months due to minuscule errors such as incorrectly estimating adjusted gross income, one incorrect or illegible digit in a social security number, or a slightly incorrect amount listed for the Child Tax Credit.
Submitting an exact and accurate tax return is the best way to avoid ending up with an 11% chance of having your tax refund question answered.
And working with a tax professional might just be the best way to make sure you’re submitting a bulletproof tax return.