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The IRS says that most refunds will be paid within 21 days, but many tax filers are finding out (yet again) that it could take much longer, despite filing early and getting their return accepted by the IRS.
Waiting weeks, months or even a whole tax season for IRS updates has not been uncommon for many filers, especially those whose returns are pulled for further verification. Here’s how things are going this tax season and what you can expect. I have also linked to articles that may explain and help with certain delays.
2023 IRS Tax Season Statistics – Returns Processed and Average Refund
The IRS has reported an improvement in 2023 tax season processing (for 2022 returns) with over 117 million returns processed as of April 14th.
The average refund to date is around $2,900, which is around $300 lower than last year at the same time.
There are still over 30 million more returns expected this tax season and refund delays are due to additional reviews and ID verification the IRS is having to undertake.
If your return does not have any identity verification issues the IRS will start processing your refund. You will generally see transaction codes 570/971 on your IRS tax transcript if there are issues with your return that could delay processing and subsequent refund payments. Be on the lookout for IRS notices with more details and respond promptly.
Estimated IRS Refund Processing Delays
Below is a table showing how long delays for certain tax filers, based on key filing items, could take this upcoming tax season beyond the standard IRS refund processing schedule.
|Items Delaying Tax Refund||Expected Avg. Refund Delay (beyond 21 days)|
|Return Errors or Missing Data (TC 570)||2 to 4 weeks|
|Have a EITC or CTC Payment (PATH act)||2 weeks (By Feb 16th)|
|Identity Verification (Fraud)||8 to 11 weeks|
|Income Validation or Further reviews||3 to 5 weeks|
|Tax Refund Offsets (TC 203/898)||2 to 4 weeks|
|Amended Returns||Up to 20 weeks|
The refund delay durations noted in the table above are all estimates based on anecdotal evidence and reader feedback. It should not be construed as official IRS data or guidance.
You can see additional data from the National Tax Payer Advocate report that provides up to date statistics around IRS processing delays.
Refund Delays continue
The IRS has processed all paper and electronic individual returns received prior to January 2023, including those for tax year 2021 or earlier if those returns had no errors or did not require further review.
As of early February, the IRS had nearly 2 million unprocessed individual returns (2022 and 2021 returns), with about 80% requiring error correction or other special handling. Over 100,000 paper filed returns are waiting to be reviewed and processed.
This work (to resolve these returns) does not typically require the IRS to correspond with taxpayers, but if it 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.
If they need more information or need you to verify you sent the tax return, the IRS will send you a letter via USPS mail. The resolution of these issues could take more than 120 days depending on how quickly and accurately you respond, and how quickly we can complete the processing of your return.
The IRS had 439,000 million unprocessed Forms 1040-X (amended returns) and are processing these returns in the order received and the current timeframe can be more than 20 weeksIRS operations update – Feb 2023
And getting a live IRS agent has been enough tougher with the Tax advocate service recently saying that it is still a major struggle for tax filers to reach a live IRS agent in a timely manner. With over 70 million calls in the latest tax season, that means a lot of unhappy callers.
This has been especially frustrating for filers who have been unable to learn when their tax return might be processed or when they can expect to receive their refund and are seeing “Return Processing Has Been Delayed Beyond The Normal Timeframe” messages like the ones below or “N/A” on their tax transcript filing status.
Why Was My Refund Delayed?
The most common reason for tax return processing delays in current and past tax seasons is due to a legal requirement (under the PATH act) that requires the IRS to wait for around 3 weeks after it starts processing returns to issue refunds to taxpayers claiming the earned income tax credit or the additional child tax credit.
Missing or incorrect information can also cause additional delays as may get sent for manual processing and the IRS will need to contact you by mail to get additional information to resolve the issue and process the return.
This could take several weeks based on the issue. Do not file an amended return if you notice an error after filing and instead wait to hear from the IRS.
Similarly if the income you reported does not match what the IRS has from your employers (W2 employees especially) or your 1099 income raises red flags based on the occupation/jobs you are reporting, the IRS may require additional verification and processing.
Like missing or incorrect information issues if items cannot be adjusted automatically by the IRS, it will delay processing of any refund payments you are due.
Tax Refund Debt Offsets
The other common delay people are seeing is due to tax offsets which cannot only delay refund processing, but actually reduce the amount of your refund. Tax Refund offsets include items like unpaid child support, federal agency debt outstanding student loans or back state income tax.”
You will however be notified if an offset is being applied to your refund or results in you having taxes due.
Incorrect recovery rebate credit (RRC) or child tax credit (CTC) claims for you or your dependents could cause a delay in processing your return as the IRS will have to adjust the refund payment (with an official notice sent) to reflect the correct amount.
See more on Tax Topic 203 and Tax Code 898 related to BFS/TOP offsets.
2022 IRS Tax Season Statistics
The IRS has reported end of year statistics for the 2022 tax season which showed it delivered over 110 million refunds, with the average refund being nearly $3,330. This is over 14% more than the average refund at the same time last year.
Overall it was a rough season for many tax payers with people waiting months or even years for prior year returns to get done.
2021 Tax Season Summary
The big mess, which some called the 2020-2021 pandemic tax season, has also resulted in nearly 10 million fewer federal income tax refunds being issued through the regular tax season — a 12%+ decline — compared with the same time last year.
The average refund however of $2,888 was higher than prior years thanks to higher unemployment and more government pandemic stimulus and tax credits.
The IRS did extend the 2020-2021 tax season by a month to catch-up on processing and allow tax payers to file their returns (given some of the new tax adjustments).
I would not at all be surprised if the latest season is also extended further, given ongoing IRS backlogs and ongoing staffing shortages.