Has your tax refund been blocked? You could have your money by the end of the year
The IRS has good news for filers waiting for tax refunds.
- The IRS is sitting on a huge pile of unprocessed tax returns.
- The agency is hiring 10,000 new employees to quickly deal with its backlog.
There’s a reason filers are often told to file their returns electronically rather than on paper. The IRS takes much longer to process paper returns than electronic returns, and if you’re owed money, that could mean waiting longer than necessary to get the money you’re entitled to.
Meanwhile, the IRS has in recent years fallen behind in processing paper returns. As such, many filers wait a long time to get a tax refund.
But they may not have to wait much longer. The IRS just announced that it plans to eliminate its current backlog by the end of 2022. This means that many filers could see their refunds arrive in their bank accounts sooner than expected.
Why the tax refund heist?
The IRS is an agency that has been sorely understaffed for years. To some extent, this has benefited taxpayers. Since the agency does not have the funds to hire enough staff, it has had to reduce its tax audit practices.
On the other hand, in recent years it has become more difficult to speak to an IRS agent on the phone to answer tax questions. It also takes longer for the agency to manually process the documents it receives in the mail. This extends to paper tax returns, many of which have not been processed since previous tax seasons.
The problem was compounded by the closure of most IRS field offices in 2020, when the COVID-19 outbreak first broke out. It wasn’t an unreasonable thing for the IRS to do. If anything, it was consistent with how many companies transitioned their employees to remote work that year. But he did result in a scenario where mailed tax returns had remained unopened – for months.
To quickly deal with its backlog, the IRS plans to hire 10,000 new employees, 5,000 of whom are expected to be onboarded in the coming months. The agency estimates that it will be able to eliminate its backlog by the end of the current year, barring unforeseen circumstances.
Meanwhile, President Biden recently approved $12.6 billion for the agency’s 2022 budget. This represents a 6% increase from 2021 and should give the agency more hiring flexibility.
How to avoid late tax refunds
If the idea of a deferred tax refund isn’t for you, one of the most important things you can do is file your taxes electronically rather than on paper. Also, be sure to check your return for errors, regardless of how you submit it.
Most tax software is good at spotting math errors, and the IRS will usually try to correct them anyway. But other errors, like an incorrect social security number, could lead to a rejected tax return and a significant delay in reimbursement.
Also, if you receive correspondence from the IRS in the mail, try to address it as soon as possible, especially if it impacts your refund. The sooner you respond, the sooner someone at the IRS can process it and get you the money you’re entitled to.