We wanted to share an update on some reasons behind IRS delays which are impacting many of our clients. An Annual Report to Congress recently released by National Taxpayer Advocate Erin M. Collins called 2021 “the most challenging year taxpayers and tax professionals have ever experienced.” Many of you may agree, especially if waiting on refunds or updates on filed returns, amended returns, and responses to other correspondence with the IRS.
Here is a summary of some of the challenges faced by the IRS detailed in Collins’ report:
- A backlog of 6 million original paper returns
- A backlog of 2.3 million amended returns
- 2 million Forms 941 and 941X (Employer’s Quarterly Federal Tax Return and Adjusted Return)
- 5 million items of taxpayer correspondence
- Average response time of 199 days during 2021 to process 6.2 million taxpayer responses to proposed adjustments (the average time during 2019 was 74 days)
- Only about 11% of callers getting through to customer service representatives, successful calls having an average waiting time of 23 minutes
One of the major fallout issues of the processing backlog is that if the IRS hasn’t processed a return or a response to an adjustment there are automatic triggers in the system which can cause adverse action or the withholding of refund amounts. Additionally, we have experienced issues with timely posting of payments by the IRS to taxpayer accounts which can also result in automatically triggered adverse action notices.
When it comes to waiting for delayed tax refunds, the “Where’s My Refund?” tool provided by the IRS does not provide any information on unprocessed returns or explanations for delays, but it can at least assure that the return is in the IRS’ possession.
We have had many frustrations within our office and expressed by our clients when it comes to waiting unexpected lengths of time for IRS responses and refunds, etc. We are also seeing similar issues at the state level of taxpayer services. While there is no quick solution, it can be helpful to know the scope of the issue and to know that the best we can do generally is to wait it out.