Every tax season is challenging. Often, it's because Congress has fiddled with tax laws, presenting new learning curves for both taxpayers and the preparers they hire to lead them through the Internal Revenue Code.
Problems during the last two years, however, can be blamed on COVID-19. Not only did the pandemic produce new laws, there have been delayed deadlines and health-related closures that created processing problems for the Internal Revenue Service.
The latest 2021 filing season hurdle, for both taxpayers and the IRS, is the amount of tax returns the agency says must be processed by hand.
The IRS is now holding more than 29 million returns for manual processing, according to the National Taxpayer Advocate's (NTA's) office.
"As one would expect, IRS employees are stretched thin working through the manual processing of these returns, so if a taxpayer’s return is pulled for manual processing, there will be delays," notes a post last week on the NTA Blog.
And as readers of the ol' blog would expect, those 29+ million tax returns get this week's By the Numbers recognition.
Reasons for closer inspections: The post, titled 2021 Filing Season Bumps in the Road: Part I*, breaks out the reasons the 29 million returns are being handled by hand.
- 8 million returns are being personally reviewed by the IRS' Error Resolution System (ERS) unit. Many of these filings being personally reviewed are Recovery Rebate Credit (RRC) claims. This tax credit is how individuals who didn't receive the full amount of COVID economic impact payments last year can get the money now. Other ERS filings are getting added scrutiny to verify income where taxpayers used their 2019 earnings instead of money made in 2020 to claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC).
- 5.3 million individual 2019 and 2020 returns that were submitted as paper forms must, obviously, be manually entered into the IRS system.
- 4.7 million individual returns are being looked at by IRS staff because the filings had processing errors or fraud identification issues that require additional information from the filers.
- 11 million business and other returns also are being manually processed.
*Quick aside. I am not encouraged by the Part 1 notation appended to this NTA Blog post's title. The item is pretty comprehensive. What other problems have cropped up? I guess we'll find out in Part 2.
But I digress. Back to the Part 1 processing problem.
Many refund questions, few answers: Many of those on-hold returns produce refunds for the filers. So, not surprisingly, frustration among those taxpayers is growing.
The usual ways to track refunds are adding to annoyance. Those who are calling the IRS are discovering that the usual difficulty in getting through is even worse this year.
The NTA Blog says that this filing season, the IRS has seen an increase in calls to its Accounts Management (AM) toll-free lines of over 300 percent. As of April 10, IRS employees have answered about two percent of the roughly 70 million taxpayer calls to the agency's 1040 telephone line.
In connection with the calls, the IRS has reported an official "Level of Service" of five percent. That means that only about one of every 50 calls has gotten through to a telephone assistor.
On top of that, taxpayers who managed to get through have waited on hold an average of 20 minutes. Insert your hold music complaint here.
Some taxpayers have turned to the NTA office for help about their delayed refunds. Unfortunately, the word there is not encouraging either. Taxpayer Advocates must follow specific rules on when the NTA can, and can't, help, and delayed refunds isn't on that list.
For now, the best way to find the status of your return and associated refund is to use the IRS' online Where's My Refund? tracking tool
Some hopeful IRS filing season signs: But the NTA does have a bit of good news.
The IRS has processed more than 91 million 2020 tax year 1040 forms.
It has issued, as of the April 22 blog post date, around 68 million refunds.
As for coronavirus economic impact payments (EIPs), the IRS is still issuing the third round that was authorized on March 11. To date, more than 159 million EIPs have been distributed.
Even better, the IRS has adjusted its systems so that taxpayers who initially didn't get as much EIP as they qualify for based on their 2020 income won't have do anything further to get the balance due. Where they got a payment before filing their 2020 return, once the IRS processes that filing, if they're due more EIP, the IRS will send them the catch-up amount automatically.
That good filing and refund news, however, doesn't do anything for the 29 million who are waiting for the IRS to get to their on-hold filings.
Sorry, but all y'all are just going to have to wait a bit longer.
You also might find these items of interest:
- TAS now can help taxpayers with certain COVID-19 stimulus payment problems
- Free File can help those who don't usually file taxes get COVID payments and more
- IRS acts on Taxpayer Advocate request to discontinue offsets of some COVID relief payments
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Carter Jay
If you think filing tax is a headache, then this is even a bigger one. Even though it’s not anyone’s fault but the pandemic’s, everyone is suffering in one way or another and this is a problem which will take a long time to sort out.