Tax Accountants Overwhelmed with Tax Refund Delays Complaints. The IRS is behind in processing nearly 7 million tax returns due to implementing new stimulus. The agency has a backlog of returns that have not been processed for weeks. Now it has to send out stimulus payments and change the tax code in the middle of a busy filing season.

Tax Accountants note Nearly 7 million tax filers are in limbo and facing substantial delays in getting refunds so far this tax filing season, as the Internal Revenue Service struggles to keep up with the demands of issuing stimulus checks and implementing myriad tax code changes from coronavirus relief packages, including the one President Biden signed this week.

There are 6.7 million returns that have not yet been processed, more than three times the number in the same period last year when fewer than 2 million returns faced delayed processing, Tax Accountants data shows.

The delays are largely a result of a year’s worth of extraordinary stimulus measures that have created more complicated tax returns for millions of Americans. The IRS was already straining to adjust after the December stimulus package. The newest package, the American Rescue Plan, adds even more tasks for the agency, including sending out another round of one-time payments, making changes to tax rules to help unemployed workers, and paying out a new child tax benefit.

Many Americans who did not receive the correct stimulus payments in January of last year are filing for additional money now. And some low-income filers are newly eligible for more tax credits than usual. The IRS is having to manually review a lot of these returns, a slow process that is delaying refunds for millions of low-income families after the agency has faced a decade’s worth of budget cuts and staffing losses.

More than 100 people still waiting for the IRS to process their returns shared their stories with The Washington Post. Most filed electronically on Feb. 12, when the IRS opened tax filing season. They were eager to get their refunds and to update their information with the IRS ahead of the $1,400 stimulus payments going out. But a month later, many of these early filers are still waiting for their returns to be processed — and their refunds to be deposited.

“I’m supposed to get a $5,600 refund. I absolutely need that money, and the IRS just won’t give me any answers,” states one taxpayer after another. Tax Accountants Overwhelmed with Tax Refund Delays Complaints.

Source IRS:

Refunds not expected until the end of April

 The main two issues to emerge so far this tax filing season are a large number of returns being sent for manual review and the malfunctioning of the popular “Where’s My Refund?” tool for weeks. The tool was fixed last weekend, the IRS confirmed, but the processing delays persist.

Tax Accountants have been urging the IRS to let people know why returns are delayed. She is also concerned that the processing delays could get even worse if millions of people who already filed their taxes have to file amended returns to benefit from the changes Congress just enacted.

For example, unemployed workers could see tax breaks, because Congress agreed to make the first $10,200 of unemployment benefits received from the government in 2020 nontaxable.

The backlog is severe for any tax return requiring a manual review by an experienced IRS staffer. Amended returns typically require a manual review, and many of the 6.7 million returns that have yet to be processed are also sitting in line for a manual review.

The IRS said that 36 million refunds have gone out so far and that the agency is moving as fast as it can to get stimulus payments out in the coming days, all while processing more returns.

Tax Accountants note that while the IRS issues most tax refunds within 21 days of the filing season start, it’s possible some refunds may take longer,” said IRS spokesman Robert Marvin. “Many factors can affect the timing of your refund after we receive your return. Some tax returns take longer to process than others. For example, returns with an error, incomplete information, or those affected by theft or fraud may take longer to process.

An IRS call center agent told a frustrated client (identity withheld) on Wednesday that “over 7 million returns were sent to the Error Resolution System to buy time.”

The Error Resolution System is the group involved in the manual review of returns. Most years, it deals mainly with returns that are flagged as potentially fraudulent, but this year millions of returns claiming stimulus money or involving the earned-income tax credit or the child tax credit have also gone to the error department. Most of these filers are low-income families who lost a job or who had a new baby in 2020 and should have received stimulus checks based on those events but did not.

The other problem is that Congress said low-income tax filers could use either 2019 or 2020 income to qualify for the highest possible tax credits for children. IRS systems have struggled to handle two different years of income qualification.

The other problem is that Congress said low-income tax filers could use either 2019 or 2020 income to qualify for the highest possible tax credits for children. IRS systems have struggled to handle two different years of income qualification.

The IRS had its budget slashed by 20 percent from 2010 to 2019, and staffing is down by 23 percent — or more than 22,000 positions, according to the Government Accountability Office. “Brilliant”

At some point when you take so much money out of an agency, it will do less with less, and that’s showing up across the IRS — from the time it takes to process a return to how many calls it can answer to lower enforcement,” said Tax Accountant Gustavo Viera.