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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 has not been uncommon for many filers. 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 why certain delays are happening.
Tax Season Updates – Refund Delays continue
The last few tax seasons have been bumpy with many filers reporting that they are already well past three weeks or the 21 days standard processing deadline since that the IRS says returns will be processed within.
In fact IRS recently confirmed that tax season delays are set to continue due to factors such as tax filer submission errors that require manual reviews, processing/validation of past year and amended returns, increase fraud/identity verification and ongoing agency staffing shortages.
As of October 28, 2022, the IRS had 4.4 million unprocessed individual returns received this year. These include tax year 2021 returns and late filed prior year returns. Of these, 1.9 million returns require error correction or other special handling, and 2.5 million are paper returns waiting to be reviewed and processed.
This work does not typically require the IRS to correspond with taxpayers, but 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 we [the IRS] need more information or need you to verify you sent the tax return, we will send you a letter. 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 1.1 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 – Nov 2022
Coupled with having to pay all the new or expanded refundable tax credits like the advance child tax credit (advCTC) payment and process multiple rounds of stimulus checks, the wait time to get your tax refund could stretch into months.
Even worse, many folks filing 2021 tax returns this year are still waiting for their 2020 returns/refunds to be processed.
And getting a live IRS agent has been enough tougher with the Tax advocate service recently saying that there was only a 1-in-10 chance on average that tax filers reached a live IRS agent. With 73 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.
This is evidenced by the IRS’ own data which shows they are over 7% slower than last year in terms of tax returns processed. While they are now processing 2021 tax returns, they still have millions of unprocessed 2020-2021 tax season returns to get through as well.
2022 Filing Statistics (to date) – Returns Processed and Average Refund
The IRS has reported that it delivered over 96 million refunds for the regular tax season, with the average refund being $3,039. This is $212 more than the average refund of $2,827 at the same time last year.
|IRS Activity||May 20th||April 22nd||Mar 18th||Mar 4th||Feb 18th|
|# of Returns Received||145.3 million||138.9 million||72.2 million||54.7 million||35.9 million|
|# of Returns Processed||140.7 million||133.8 million||70.3 million||53.1 million||33.5 million|
|# of Refunds paid:||96.2 million||88.7 million||51.8 million||38 million||22.1 million|
|Average Refund Amount||$3,039||$3,012||$3,305||$3,401||$3,536|
Another 5 million returns are expected to be processed once approved filing extensions are submitted.
The Path Act was lifted in mid-February for those who claimed the EIC or ACTC in their tax return. For those whose returns were successfully processed by the IRS with no issues, should have seen their direct deposit payment by now.
Most other refund delays are due to additional reviews the IRS is having to undertake for verifying eligibility for the claimed refundable credits. If impacted, you will generally see this transaction codes 570/971 on your IRS tax transcript.
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Standard IRS Refund Processing Times & Potential 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.
“For about 25% of the returns flagged for income verification, refunds took longer than 56 days, and for about 18% of those flagged for identity verification, refunds took longer than 120 days.”
|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)||+3 weeks (By Feb 16th)|
|Identity Verification (Fraud)||+6 to 8 weeks|
|Income Validation or Further reviews||+4 to 8 weeks|
|Tax Refund Offsets (TC 203/898)||+2 to 4 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.
You can see additional data from the latest National Tax Payer Advocate report that provide up to date statistics around IRS processing delays.
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 BFS Offsets (Topic No. 203 Reduced Refund)
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.
Missing stimulus check claims via a recovery rebate credit (RRC) should not delay your return according to the IRS, but trying to claim an incorrect amount 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.
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.