IRS – Where is my Refund? 

This blog contains numerous statistical and numerical references which were obtained through other publicly available sources. If you require citations, please let us know and we will be happy to share.

Covid-19 has impacted individuals in a variety of ways, from illness to lost jobs and closed businesses. Adding insult to injury, many individuals who filed their tax returns on time and are looking forward to receiving their refunds to help reduce financial hardships can expect to wait even longer. While the U.S. Treasury Department and the Internal Revenue Service (IRS) extended the individual tax filing deadline from April 15 to May 17, 2021, taxpayers were not expecting an extension on the receipt of their refunds.

Typically, the IRS issues nine out of 10 refunds within 21 days, but for the 2021 tax filing season, many taxpayers will have to wait 90 to 120 days, and others will have to wait even longer.

As of August 6, 2021, the IRS has 12.7 million individual income tax returns still to be processed. This is a substantial decrease from the 35 million returns as of May 22, 2021, but does not provide relief to the taxpayers still waiting for their refunds.  These outstanding returns are paper-filed returns or returns containing errors, missing information, or discrepancies from the information the IRS has on file. These tax returns need to be manually reviewed by IRS agents, often in conjunction with agents in different departments, leading to the delays in the processing of the returns.

The passing of the Consolidated Appropriations Act (Act) on December 27, 2020 was welcomed by many. The Act is a spending bill that provides stimulus relief in relation to the pandemic. Unfortunately, the IRS was unable to update its systems in time to allow for the automated verification of certain credits, such as the Earned Income Tax Credit and Additional Child Tax Credit, based on 2019 earnings. This verification also requires manual processing by an IRS agent, further increasing delays.

Processing tax returns is not the only thing keeping IRS agents busy. During the 2021 tax filing season, there were over 167 million calls made to the IRS – four times more than the number of calls made during the 2020 filing season.  At one point, there were 1,500 calls made to the IRS per second. Of the 85 million calls made to the IRS general line, only 2.5 million taxpayers got through to an agent.  In other words, you have a better chance of winning a prize in Powerball lottery than getting through to the IRS during peak tax season.

Due to Covid-19, 90% of IRS buildings were closed at one point, and the vast majority of IRS employees were forced to work remotely. This brings further process inefficiencies due to lack of direct contact among IRS agents and lack of access to equipment available in IRS buildings. As a result of building closures, there are currently trailers full of documents the IRS has yet to open.

Other obstacles and inefficiencies being faced during the 2021 tax season, include:

• Identity verification
• Backlog in processing authorizations
• Lack of working printers and copiers
• Closure of the Federal Records Center (FRC)

• Limited in-person taxpayer interaction with the IRS
• Limited online and self-service tools
• Lack of service options for taxpayers living abroad.

As of March 30, 2021, 42%of the printers and copiers of the IRS Submission Processing functions were unusable or broken. With all the daily paper requirements of the IRS, one would think that at least more than half of the printers would be functioning properly.

IRS employees are not the only ones impacted by Covid. For the 2021 filing season, the IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs, which help elderly and low-income taxpayers file returns, had only 30% of the volunteers when compared to the 2020 filing season. There was a 45% decline in the number of returns prepared at volunteer sites in 2020 compared to 2018, meaning many taxpayers who would normally have their returns prepared by volunteers have been forced to prepare their own for 2020. These taxpayers are more likely to have errors and omissions on their tax returns. And again, this will result in returns requiring manual review by IRS agents and further delays to their refunds.

If you are still one of the many taxpayers waiting for your refund, you can try to get an update by accessing the “Where’s My Refund” function of the IRS website, or you can try your luck at calling the IRS.

The IRS is planning to hire 87,000 employees over the next six years.  Just as we hope to be getting closer to the end of Covid-19, we also hope taxpayers are getting closer to receiving their refunds.