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IRS backlogs causing massive delays in processing returns

The COVID-19 pandemic, a backlog of returns from last year and a worker shortage may add up to...
The COVID-19 pandemic, a backlog of returns from last year and a worker shortage may add up to long delays.
Published: May. 13, 2022 at 6:11 PM EDT
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PROCTORVILLE, Ohio (WSAZ) - According to the IRS, as of April 29, 2022, there were more than 9.6 million unprocessed individual returns which include returns received before 2022, and new tax year 2021 returns.

Of these, 2.9 million returns required error correction or other special handling, and 6.7 million are paper returns waiting to be reviewed and processed.

The government has been blaming staffing shortages, budget cuts and pandemic disruptions.

Bill Kerstetter helped his mother file her taxes in 2021. To date, she is still awaiting a refund of nearly $3,400.

She owed the state of Ohio roughly $160. He says that check was cashed quickly.

“We haven’t seen or heard anything from the federal and each time we inquire about it, it gets the same story, it’s in process,” he said.

His mom is 84 years old and lives in an assisted nursing facility. The money she’s owed, would go a long way in helping to pay for her care.

“Obviously in her position, the money is very helpful because she has no income other than her benefits from Social Security and VA,” he told WSAZ. “So what we’re waiting on, the amount is going to get sucked up in half a month in her fees at the facility so obviously it’s going to be helpful.”

He says he has a hard time reaching a real person on the phone. When he does, he gets the runaround. This year, she had to file an extension because they’re still awaiting their 2021 refund.

“The frustration, as you can see in my voice,” he said. “I don’t know where to go from here. I don’t know who to talk to. I can’t find anybody to talk to and I don’t know what to do.”

According to an NBC report, this year, tax returns filed by paper will take five to eight months to process. This comes after the pandemic when Congress cut the IRS’s budget by 20%. Though the tax filing deadline was extended during the pandemic, this year extensions will need to be requested individually. Financial planners advise using tax refunds to pay down debt or invest and save.

A bipartisan group of Senators and Representatives wrote a letter to the IRS Commissioner in March looking for answers and potential solutions.

To read the letter, click here.

A recent report indicates the IRS destroyed data for an estimated 30 million filers in March 2021, according to the Treasury Inspector General for Tax Administration. You can read more here.

Info provided by the IRS:

Filed a Tax Return (Updated May 6, 2022)

The IRS is opening mail within normal timeframes and all paper and electronic individual refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review.

As of April 29, 2022, we had 9.6 million unprocessed individual returns which include returns received before 2022, and new tax year 2021 returns. Of these, 2.9 million returns require error correction or other special handling, and 6.7 million are paper returns waiting to be reviewed and processed. This work does not typically require us to correspond with taxpayers but does require special handling by an IRS employee so, in these instances, it is taking the IRS more than 21 days to issue any related refund and in some cases this work could take 90 to 120 days. If a correction is made to any Recovery Rebate Credit, Child Tax Credit, Earned Income Tax Credit or Additional Child Tax Credit claimed on the return, the IRS will send taxpayers an explanation. Taxpayers are encouraged to continue to check Where’s My Refund? for their personalized refund status and can review Tax Season Refund Frequently Asked Questions.

How long you may have to wait: The IRS understands the importance of timely processing of tax returns and refund issuance. We have processed all error free refund returns received prior to April 2021 and continue to work the returns that need to be manually reviewed due to errors. We are continuing to reroute tax returns and taxpayer correspondence from locations that are behind to locations where more staff is available, and we are taking other actions to minimize any delays. Tax returns are opened and processed in the order received. As the return is processed, whether it was filed electronically or on paper, it may be delayed because it has a mistake including errors concerning the Recovery Rebate Credit and the Child Tax Credit, is missing information, or there is suspected identity theft or fraud. If we can fix it without contacting you, we will. If we need more information or need you to verify that it was you who sent the tax return, we will write you a letter. The resolution of these issues could take 90 to 120 days depending on how quickly and accurately you respond, and the ability of IRS staff trained and working under social distancing requirements to complete the processing of your return.

What you should do: In most instances, no further action is needed but you may check Where’s my refund or you can view your account. If you filed electronically and received an acknowledgement, you do not need to take any further action other than promptly responding to any requests for information. If you filed on paper, check Where’s my refund? If it tells you we have received your return or are processing or reviewing it, we are processing your return, but it may be under review. We’re working hard to get through the carryover inventory. Please don’t file a second tax return or contact the IRS about the status of your return.

Status of Processing Form 1040-X, Amended Individual Tax Return: As of April 30, 2022, we had 2.3 million unprocessed Forms 1040-X. We are processing these returns in the order received and are working hard to get through the inventory. The current timeframe can be more than 20 weeks instead of up to 16. Please don’t file a second tax return or contact the IRS about the status of your amended return. Taxpayers should continue to check Where’s My Amended Return? for the most up to date processing status available.

Status of Unemployment Compensation Exclusion Corrections: The IRS continues to review tax year 2020 returns and process corrections for taxpayers who paid taxes on unemployment compensation, to exclude the compensation from income if eligible. To date, the IRS has issued over 11.8 million refunds totaling $14.5 billion. The IRS is now concentrating on more complex returns. Some taxpayers will receive refunds, while others will have the overpayment applied to taxes due or other debts. The IRS will mail a letter to affected taxpayers to inform them of the corrections, generally within 30 days from when the corrections were completed. See the 2020 Unemployment Compensation Exclusion FAQs for more information, including details on filing an amended return.

Status of Processing Form 941, Employer’s Quarterly Federal Tax Return: The IRS is now opening mail within normal timeframes. As of May 4, 2022, we had 2.5 million unprocessed Forms 941. Tax returns are opened in the order received. If you filed electronically and received an acknowledgement, you do not need to take any further action other than promptly responding to any requests for information. We’re working hard to get through the carryover inventory Please don’t file a second tax return or contact the IRS about the status of your return.

As of May 4, 2022, our total inventory of unprocessed Forms 941-X was approximately 301,000, some of which cannot be processed until the related 941s are processed. While not all these returns involve a COVID credit, the inventory is being worked at two sites (Cincinnati and Ogden) that have trained staff to work possible COVID credits.

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