Its been a frustrating time for millions of Americans still waiting for their tax return to be processed and refund payment to be made.
The IRS guidelines state that 9 out of 10 returns should be processed within 21 days but as many tax payers have found – this is simply not the case.
Some have been waiting weeks or even several months (including from prior tax years) to get an update on their tax return status without much success.
They either get vague messages and codes on the refund tracker tool or tax transcript, or one that says the IRS cannot provide any information.
In fact even after PATH mandated restrictions for releasing refund payments lift, many filers are still reporting going from the PATH message to something with “…your tax return is still being processed…” or “…we received your return and it is being processed...” or “Return Processing Has Been Delayed Beyond The Normal Timeframe“
In their latest operations update the IRS has confirmed that 98% of regular paper and electronic individual refund returns received for the 2021 tax year have been processed if the return had no errors or did not require further review (special handling).
However the IRS has stated it still has nearly 7 million unprocessed individual returns including 2020 tax year returns with errors which may require special handling and additional reviews (see this YT video for more on processing delays)
This includes amended returns with Recovery Rebate Credit (RRC) corrections or ones that require validation of prior year(s) income used to figure the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC).
Tax Return “Still Being Processed” vs. “Being Processed”
As you can see from some of the WMR/IRS2Go screenshots here, there is a subtle difference in messaging for refund processing. One status message (see above example) starts with the first line, “Your tax return is still being processed…” The other variation is your “We have received your tax return and it is being processed“
The word “still” is the key difference and can have significant implications. If you see still being processed, it likely means your return processed has been delayed beyond the 21 day standard timeline. You will need to check your transcript where you can get more details and will likely see code 571.
You will also likely see the message in the following section below if delays extend beyond 60 days. Most times the extended delays are due to math errors (mainly for paper returns), return reconciliation errors, additional security/identity verification, issues with credits being claimed or injured spouse claims for dependents you may be claiming.
In this situation you will need for the IRS to complete their automated or manual reviews, after which they will send any applicable notices. It may then take a few more weeks until you see code 846 – Refund issued on your transcript and the refund sent status on the WMR site. See the applicable section below for more on code 846.
If you don’t see the word still and it just has the message, “We have received your tax return and it is being processed,” then this is a good sign and it means your return and refund should be paid within 21 days, unless other issues are found during processing.
Tax refund we cannot provide any information
This is a message many tax payers see immediately after filing their return or after several months of processing status messages. This normally indicates the IRS has not started processing your return or has hit a major roadblock or systemic issue preventing them from processing your tax refund further.
You normally have to wait 24 to 48 hours to get your latest refund status. So if you see the message above it just means you should wait and check back a day or two later. Nothing is wrong and your return/refund will follow the normal IRS refund schedule.
However if it has been several weeks and you see the message above or a variation of the above that has the line, “…we cannot provide any information about your refund….” it means you likely have to provide the IRS additional or corrected information, or complete additional identity verification checks.
You should follow the prompts or guidance on the message and look for an IRS notice in the mail with more information.
If you used a tax preparer or accountant, you should contact them to confirm they filed the information with your correct information. They should also forward you the IRS acknowledgement email for e-filing your return.
What is the IRS doing to manually resolve delayed returns with errors?
In many cases the IRS can process/resolve tax returns with errors without having to contact the taxpayer. E.g mistakes or overpayments with recent stimulus checks (recovery rebate credits).
However this is still a manual process and an IRS agent has to do a detailed review of the return and corroborate with other third party sources information; e.g. from employers or other government agencies. This will result you seeing a “…return processing has been delayed beyond the normal timeframe…” message as shown below.
It is this special or manual handling, which is handled by a separate department, that causes tax return processing and refund payments to take more than 21 days.
Based on the severity of the issue this delay could add several weeks to when you hear back from the IRS and see your refund payment.
Most errors are flagged systematically due to reconciliation errors in returns and other documents for posting to the IRS Master File (IMF) which is processed in daily cycles.
How long will the extra processing delay my refund?
The IRS has confirmed that this manual processing could add another 90 to 120 days to the standard processing timeline, which has been exacerbated by ongoing staffing shortages.
If a correction is made to any RRC, EITC or ACTC claimed on the return, the IRS will send taxpayers an explanation via mail. You can also see these on your transcript and appeal it if they don’t agree with the adjustment. See this video on reading your IRS transcript.
Once processing is complete, and all required verifications have been done, you will get an updated message on WMR/IRS2Go and on your transcript. This show against Tax Topic Code 846 (Refund Issued) Code with your estimated Direct Deposit date. You will see your final refund in your account shortly around this date.
Suspected identity theft or fraud delaying refunds
Another cause of ongoing delays in refund payments is related to the increased levels of fraud related to recent IRS payments for stimulus checks and advance tax credits, or general tax payer identity fraud.
If the IRS cannot confidently identify a taxpayer (or claimed dependents) based on the return they filed, they will send a letter to the taxpayers address on file to complete any required verification.
This could add several weeks and multiple rounds of correspondence to get to a final resolution. There are specific tax codes that will show up on your refund if you are under a fraud alert and you will need to follow the IRS letters to clear fraud flags and re-verify your identity.
IRS staffing shortages
It’s no secret that severe IRS staffing shortages due to the pandemic, great resignation and budget constraints have meant there are fewer staff to process the growing number of current and amended returns.
Because of these staffing shortages and retirements, it is taking longer to process returns that require manual verification and so the backlogs keep growing every tax season, as do the delays.
Fortunately, under the IRA bill and due to easing COVID restrictions the IRS will have over 5,000 more agents to help with processing and customer services this coming tax season, including significant system updates. This should all mean faster refund processing.
How long will processing for amended returns take?
The IRS still has nearly one million unprocessed Amended Individual Tax Returns (Form 1040-X); and has estimated that the current processing timeframe could be more than 20 weeks. If you are stuck with this delay, don’t file another return or you’ll just be sent to the back of queue.
Further, contacting the IRS about the status of your amended return may not help much and they are recommending you check your return’s processing status online.