This blog post provides information on IRS tax return processing delays and includes suggested talking points for community partners who are receiving questions from families about delayed refunds. Read below to see the talking points.
Many taxpayers who filed tax returns earlier this year are still waiting for the refunds they anticipate and need. In her midyear report to Congress in June, National Taxpayer Advocate Erin M. Collins did not mince words about IRS tax return processing delays. She noted that at the close of May 2021, “the IRS had a larger backlog of paper tax returns than it did a year ago, and its pace of processing paper tax returns was slowing. That the backlog continues to grow is deeply concerning…” Collins, who leads The Taxpayer Advocate Service (TAS), an independent organization within the IRS, wrote that by the end of May, the backlog of paper returns was 21.3 million. While before the Covid-19 pandemic, taxpayers who submitted paper returns usually received refunds within four to six weeks, they have faced waits of six months or longer during the past year. Adding to taxpayers’ frustration, IRS employees answered only 10 percent of calls to the agency this past filing season.
As trusted community partners who have encouraged and are continuing to encourage families to file returns to claim the Child Tax Credit (CTC) and other tax credits, you may be receiving questions from individuals about why their refunds are delayed. You may also encounter hesitation to file among some individuals who have not yet done so and have friends and family members who have still not received the money they are expecting. Here, we provide additional context for IRS processing delays and suggest talking points to support your conversations with families.
The numbers above provide a glimpse into the tremendous difficulty the IRS is having in processing tax returns. The IRS is navigating diverse challenges, including the ongoing impacts of the pandemic, insufficient staffing, changes in tax laws, and technology in desperate need of revamping. While the challenges are significant and taxpayers across the country are feeling the impacts, there are signs of hope. First, delays are far worse for those who filed paper returns. The vast majority of individual income taxpayers e-filed. In her midyear report, the National Taxpayer Advocate notes, “For the overwhelming majority of taxpayers who e-filed tax returns, the filing season went smoothly.” A second piece of positive news is that the IRS made changes to reduce the number of returns stuck in the Error Resolution System (ERS), through which the IRS resolves issues with tax returns. The report highlights the impact of these changes: “At the close of the 2022 filing season, the ERS inventory stood at 1.6 million returns– a reduction of nearly 85 percent as compared with 2021. This means that millions of taxpayers received timely refunds who would have experienced delays under last year’s procedures.” A third piece of good news is that, if passed, the “The Inflation Reduction Act of 2022” would provide increased funding to the IRS that could expand its ability to process returns and respond to taxpayers’ inquiries. Proposals include ten year funding for IRS taxpayer services and funding for the IRS to produce a report on the feasibility of creating a free direct e-file tax return system.
While these positive developments point to current and future improvements, we know partners may be seeking messaging guidance for working with families who are frustrated by the unacceptable delay. Below are talking points to support you in these conversations:
IRS Tax Return Processing Delay Talking Points for Community Partners Working with Families
- It can really pay off to file a tax return to claim your expanded Child Tax Credit for 2021, even though you may have to wait to get your refund.
- The IRS is facing challenges related to the pandemic, insufficient staffing, outdated technology, and changing tax laws that are resulting in long tax refund delays, especially for people who filed paper returns.
- It’s incredibly frustrating to have to wait so long for your refund. While the wait time is unacceptable, you will get any money you are owed.
- The delays are largely due to systemic challenges, not necessarily problems with your individual tax return.
- It is best to e-file your tax return if you can. If you have not yet filed your 2021 tax return, you can file a simplified return at GetCTC.org through mid-November, or a full return through GetYourRefund.org (you have three years to claim money owed from the IRS, including the 2021 Child Tax Credit). These services are free.
- There are currently efforts underway in Congress to address the challenges in tax return processing and decrease the time people must wait for their refunds. Many organizations are advocating for these changes.
- If you need support addressing a tax dispute with the IRS, there may be free services available to you:
- Local Taxpayer Advocate Service Office: https://www.taxpayeradvocate.irs.gov/contact-us/
- Low Income Taxpayer Clinics: https://www.taxpayeradvocate.irs.gov/about-us/low-income-taxpayer-clinics-litc/
- The Center for Taxpayer Rights has tips to keep in mind if you are navigating an issue with the IRS:
- Retain copies of anything you send to the IRS
- Keep all communications you receive from the IRS
- If you call the IRS and prefer to communicate in a language other than English, you can ask to speak with a Spanish-speaking employee or for interpretation into other languages
- When speaking with IRS employees, take notes and write down their names and badge numbers
Have questions? Have you found other messages that have been helpful when addressing questions about IRS tax return processing delays? Please let us know! [email protected]