Tax Insights

Your Guide to State, Local, Federal, Estate + International Taxation

Are you still waiting for your tax refund?

Have you filed your 2020 tax return and are expecting a tax refund? Are you still anxiously awaiting that refund, and hearing stories of your friends, neighbors and co-workers already receiving theirs? This is frustrating to say the least for many taxpayers and causing concerns. Just know that you are not alone.

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The Statistics

The IRS is experiencing more backlog and congested phone lines than it has ever experienced in the past. They currently have a backlog of 35 million unprocessed individual and business returns that require manual processing – 35 million – paper tax returns! This is more than five times as many returns than were manually processed in 2019. As for phone calls, the IRS received more calls during the 2021 tax filing season alone than it has ever received in a full fiscal year. This is roughly four times as many calls as in the 2019 tax season. These statistics help bring to light the struggle the IRS is facing.

The Factors

In addition to the stats above, it was reported that some 3.7 million returns were flagged as suspicious as of May 2021, compared to just 1.3 million in 2019. Of the 3.7 million returns, less than half are paper returns and the rest consists of returns that were suspended during processing and require further review. The main reasons for a return to be flagged include 1) discrepancies between the recovery rebate credit (stimulus) claimed by the taxpayer and what the IRS records indicate the taxpayer received and 2) the IRS is double checking returns where the taxpayer elected the option to use their 2019 earnings amount instead of their 2020 earnings to claim a larger earned income tax credit or additional child tax credit. The CARES Act made this election to quickly provide refunds where needed, but it is now causing these taxpayers to have the opposite effect and have delayed refunds.

The Results

Unfortunately, at this point, the best suggestion we have is patience and checking on your tax refund status at the “Where’s My Refund” page. All we can do is wait for the backlog to clear. It is of note that calling the IRS will not help the situation or speed up your refund. Currently the IRS is experiencing an overload of phone calls. If you decide to give them a call it will result in either getting the “sorry we do not have time for your call” automated response, hold times for over two hours, or if you do reach a representative your call may be dropped.

The 2019 and 2020 tax return filing seasons have been hard on taxpayers and the IRS. We are here to provide further assistance, give us a call to discuss.

Danette J Holguin, EA

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