Tens of millions of tax returns will flood the Internal Revenue Service now that the April 18 filing deadline has arrived. But the headaches of the last tax season – and the problems left over from last year – will linger for months to come.
“The IRS needs to keep abreast of not only previous years but also this year’s tax returns before moving into the next filing season without that albatross around its neck,” said Erin Collins, the national attorney. taxpayers.
For the IRS, that has meant putting as many resources and people as possible into clearing the backlog that has built up in 2021.
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Long waits for refunds
For taxpayers, this can mean repeated efforts to get any IRS employee on the phone to answer a question or help solve a problem. This means that anyone who filed a paper return this year may be waiting a ridiculously long time, maybe six months or even nine months, to receive an income tax refund.
The IRS has historically been able to process a refund within two weeks for an electronically filed tax return and up to six weeks for a paper tax return.
To hear that something that once took six weeks can now take six months is just shocking.
Delays in repayment are creating hardship for families who could use that money to cover rising food prices at the grocery store, put gas in the tank, and maybe, if they’re lucky, buy a few new things for the house or take the kids on vacation.
This is clearly not the year to file a paper return if you want some quick cash.
Some first filers who sent in paper returns in early February are still complaining that they haven’t received their refund.
“If they file on paper, unfortunately, taxpayers, they’re going to go to the back of the line. The IRS processes last year’s returns first before moving to paper returns this year,” Collins told the Detroit Free Press.
“If you need that refund sooner, I highly recommend filing your case electronically,” Collins said. “If there is no issue with a return, those returns are pending. Typically, those refunds are paid within that 21-day period.”
However, not all returns filed electronically will generate prompt refunds. Many taxpayers who filed electronically will face delays if they made mistakes, such as claiming more money for the recovery rebate credit when IRS records show they already received it. which is due to them. The IRS checks the numbers for inconsistencies.
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IRS says 70 million refunds have already been issued
Just 10 days before the deadline for this year’s tax season, the IRS has already received 103.3 million returns through April 8. This represents 75% of expected returns, and an increase of 2.4% compared to the same period a year ago.
The IRS processed nearly 99.8 million returns, up 9.5% from a year ago.
Over 70 million refunds have been issued through April 8. The average refund reached $3,175, up 9.9% from a year ago.
Taxpayers can start checking “Where’s my refund?” to get updates on IRS.gov 24 hours after the IRS receives your electronic tax return, or four weeks after you file a paper tax return.
Fewer glitches seem to have cropped up early in the season. IRS Commissioner Charles P. Rettig told the Senate Finance Committee on April 7 that “the 2022 filing season is off to a good start in terms of processing tax returns and the operation of our computer systems.” .
Incorrect credit numbers delay refunds
Taxpayers who waited until the last minute to file a return this year had better file an extension if they’re worried they won’t have exact numbers on how much money they received for the stimulus payment. issued in 2021 or for child tax credit advance payments that were paid from July to December last year.
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You want to take more time to review both the salvage rebate credit and the child tax credit to avoid potential mistakes that could cause long delays in your refund.
The IRS has sent more than 250 million letters to help taxpayers match their IRS records for the third stimulus payment issued last year and the monthly Child Advance Tax Credit payments issued from July to December. , according to Rettig’s testimony.
The IRS sent letter 6419 to explain child tax credit benefits received in 2021.
He sent letter 6475 to explain the stimulus money received in 2021.
This year, Rettig said the IRS used new tools to help its employees review and process tax returns that contain errors and require manual reviews. The effort, he said, is “already helping taxpayers receive refunds faster in 2022.”
Why you don’t want to file a paper return
The paper backlog — and the clumsy paper-processing system — will drag out processing and delay refunds for taxpayers who filed a paper return this year. Experts say more needs to be done ahead of next year’s filing season.
Collins encouraged the IRS to quickly implement barcoding technology for paper returns by next filing season to move away from the “archaic IRS data entry process.”
The 2D barcode has been used by state tax agencies, she said, for the past two decades to automate the processing of paper tax returns.
You don’t exactly picture an Amazon warehouse when you hear about the painstaking steps IRS employees have to go through when paper returns arrive at the dock.
A sorter handles the envelopes, which split the top of the envelope. IRS employees take out the paper return to stamp it to show the date it was received, Collins said. Employees issue checks for payments to be processed and sort returns to separate individual 1040s from corporate returns. Employees review statements before any are transcribed.
Handwriting, for example, can create problems.
“It might look like a 7. It might look like a 1,” Collins said. “They go through the whole statement and literally mark it with a red pen.”
Sometimes the IRS employee must review the calculations to determine what the number is supposed to be. Sometimes the IRS employee will compare the number in question to what is on the taxpayer’s W-2 file.
The review helps before the next step, when IRS employees type this paper into the IRS system. About 22% of paper returns ended up with transcription errors, according to the Taxpayer Advocate Service.
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The disruptions that have taken place during the pandemic have only further underscored the inefficiencies — and strengthened the case for more stable funding for the IRS over the long term.
“The IRS has never had the problems we’ve had for the past two years,” Collins said.
Fortunately, some might find that this tax season may indeed be better than the last, including a bigger refund thanks to new tax breaks and some efforts by the IRS to speed up the refund process. But that won’t be everyone’s story.
As Collins says, if you’re the only taxpayer facing months of delays, that’s horrible.