A large lighted construction sign that reads "expect delays" in front of an office building.

IRS Tax Return Processing Delays

Like the rest of the world in 2020, the Internal Revenue Service (“IRS”) was also forced to run at a restricted capacity due to the Coronavirus pandemic. This has a caused a strain on its ability to process tax returns and has created a backlog. A report released by the Taxpayer Advocate Service in June revealed that the IRS was dealing with a backlog of around 35 million unprocessed returns. While this number has decreased dramatically, the IRS reports that 14.7 million returns remain unprocessed as of July 24, 2021.  The backlog has caused millions of Americans a delay in receiving their tax refunds.

The IRS has stated numerous reasons for the backlog including sending out stimulus checks, refunding unemployment compensation as well as distributing additional child tax credit amounts.  Additionally, many returns are delayed due to errors on the return, incomplete information, suspected identity theft or fraud, filing for the earned income tax credit or additional child tax credit, or a need for further review on the return.  If the delay is due to a necessary tax correction made to a recovery rebate credit, earned income tax or additional child tax credit claimed on your return, the IRS will send you an explanation. If there is a problem that needs to be fixed, the IRS will first try to proceed without contacting you. However, if additional information is needed, the IRS will write you a letter.

The IRS posted the following statement in regards to how long it will take to receive your refund:

How long you may have to wait: The IRS understands the importance of timely processing of tax returns and refund issuance. We have processed all error free returns received prior to April 2021 and continue to work the returns that need to be manually reviewed due to errors.  We are continuing to reroute tax returns and taxpayer correspondence from locations that are behind to locations where more staff is available, and we are taking other actions to minimize any delays. Tax returns are opened and processed in the order received. As the return is processed, whether it was filed electronically or on paper, it may be delayed because it has a mistake including errors concerning the Recovery Rebate Credit, is missing information, or there is suspected identity theft or fraud. If we can fix it without contacting you, we will. If we need more information or need you to verify that it was you who sent the tax return, we will write you a letter. The resolution of these issues could take 90 to 120 days depending on how quickly and accurately you respond, and the ability of IRS staff trained and working under social distancing requirements to complete the processing of your return.

Additionally, the IRS asks that taxpayers take no additional action in order to receive their refund sooner. It has, however, provided an online tool called “Where’s my refund” on the IRS website in order to check refund status.  Below is the link:

Get Refund Status (irs.gov)

If you have further questions or need additional information, please do not hesitate to reach out to our Tax Advisory Services team at Anglin or Jeremy Mosteller, Partner.

You may also be interested in our blog post about FFCRA tax credits.