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IRS reports progress in tax return backlog

July 25, 2021

Paper overload_cropped

Just about a month ago, the Internal Revenue Service reportedly had a backlog of more than 35 million individual and business returns that required manual processing. That was up from 29 million back in April.

Last week, however, the IRS said it's essentially caught up with early season individual filings.

Hey, don't shoot the messenger. That's the official word from the IRS, via its special IRS Operations During COVID-19: Mission-critical functions continue webpage.

In a July 23 update to a portion of the What You Can Expect section of that site, the tax agency says it "is opening mail within normal timeframes and all paper and electronic individual returns received prior to April 2021 have been processed if the return had no errors or did not require further review."

Tax ifs, ands, and buts: OK, that's a big "if" in that statement. "If the return had no errors or did not require further review" leaves the IRS a lot of tabulating wiggle room.

The IRS does not say how many of these error-ridden, review-required returns it's still working on. It did say, though, that, "As of July 17, 2021, we had 15.6 million unprocessed individual returns."

The IRS is a bit slow in updating its online filing season 2021 data. The latest entry there shows the agency has received through June 11 almost 152.5 million returns and had by that date processed slightly more than 141 million of those filings. That's a smaller unprocessed amount, just 11.4 million, than the COVID page's update.

Given the grumbling that continues, at least on Tax Twitter and other social media outlets, both return processing counts are, shall we say unexpected and, to many, overly-optimistic.

But those are the official IRS counts, and the 15.6 million is this weekend's By the Numbers figure.

Certain claims causing delays: The millions of still unprocessed filings, says the IRS, include tax year 2020 returns that require correction to the Recovery Rebate Credit (RRC) amount or validation of 2019 income used to figure the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC).

If that's your 1040, then you're likely not going to know it. What you will know is that you're still waiting for the resolution of your return. Again, from the IRS:

"This work does not require us to correspond with taxpayers but does require special handling by an IRS employee so, in these instances, it is taking the IRS more than 21 days to issue any related refund and in some cases this work could take 90 to 120 days." 

The IRS says that if it makes changes to any RRC, EITC or ACTC claims, then you'll get a written explanation.

The usual tax tracking advice: In the meantime, the IRS repeats its standard tax return status advice. Check the agency's Where's My Refund? online tracking tool.

I know, it's frustrating. And financially problematic for many taxpayers who've needed expected refunds based on their tax credit and added economic impact payment (EIP) amounts.

But frustrating has been the operative word for taxes, whether you're a taxpayer, tax professional or IRS employees, who've been given multiple new tasks during the 2020 and 2021 COVID-ridden filing seasons.

Here's hoping we all are rescued from this shared leaky tax boat soon.

You also might find these items of interest:

 

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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