If you’re one of the millions of people who filed your 2020 tax return early in hopes of getting a speedier refund this year, this probably won’t come as a shock, but the Internal Revenue Service is a little backed up. It’s been more than two months since the agency began accepting returns electronically, and yet even though it insisted—and still insists—that most taxpayers with direct deposit receive their refunds within 21 days, that hasn’t been the experience for many who are still waiting.
Now new details are emerging about the cause of the backlog. In a blog post last week, the National Taxpayer Advocate (NTA)—an independent office within the IRS—shed some light on the uniquely complex set of circumstances facing IRS staffers this year.
For example, let’s start with those stimulus checks. Many taxpayers who didn’t receive one, or didn’t receive the full amount, were eligible to claim their stimulus check as a credit on their 2020 tax returns. But calculating how much you’re actually owed can be tricky, and if what you claim doesn’t match the IRS’s records, that could trigger a manual review. Reviews slow down processing times and therefore slow down refunds.
And lots of things can trigger a review. In its annual report to Congress, the NTA already explained how returns that are flagged for privacy issues or simple identity verification can result in delayed refunds for taxpayers. In its latest blog post, the NTA gets into more detail about why this year has been especially troublesome. Another issue: changes to the tax law as a result of the December stimulus package, which was passed on December 27, 2020, and which left the IRS scrambling to update its systems.
“Due to the late passage of the law, the IRS was unable to timely adjust its forms and computer systems before the start of the filing season to allow for systemic processing of returns where taxpayers elected to use 2019 income,” the post reads. “Thus, the IRS had to create a manual process instead.”
“Manual process” is not a term you want to hear when you’re dealing with information on this scale.
The post goes on to report that the IRS is currently holding 29 million tax returns for manual processing. (Note that when Fast Company asked the IRS about delays as far back as early March, it downplayed the issue, but keep in mind, it is an underfunded agency that can work only so fast.)
For taxpayers who are still waiting for a refund, the NTA’s new report won’t get money into their bank accounts any quicker, but it’s worth a read for anyone seeking to understand the magnitude of our current bureaucratic tax mess.
Read the full post here.