There is old saying that the two things you can’t escape are death and taxes, and even as the Internal Revenue Service (IRS) has extended the filing deadline from April 15 to May 17 this year due to the coronavirus pandemic, the taxman will still expect to be paid on time. Yet, many who overpaid throughout the year who are waiting for their refund may have to wait a bit longer.
A question now being asked online on various forums and even to accountants or other tax filers: why is my refund delayed?
According to the IRS, it is taking longer to process mailed documents including paper tax returns and all tax return related correspondence. The IRS maintains that it is now processing all mail in the order it is received and urges tax filers not to file a second tax return and not to call the IRS. Doing so won’t speed up things and will only make it slower for everyone.
The good news is that most taxpayers receive their refund within twenty-one days of filing, but a common delay this year is because of another agency—namely the United States Postal Service. For those who mailed their returns, you need to remember that it isn’t twenty-one days from when you dropped it in the mail. It can take upwards of a week for the mail to reach the IRS, and it is dealing with a backlog of filings. Then if you’re waiting for a paper check, again be patient because first class mail is running slower than normal this year.
According to an article in USA Today, the IRS is holding some twenty-nine million tax returns for manual processing, which is contributing to more refund delays than are typical. A number of factors have come into play including the pandemic, but also sweeping changes to the tax code, limited resources at the IRS and most problematic, an outdated information technology system. The IRS is also dealing with a backlog of unprocessed 2019 paper tax returns.
The $900 billion stimulus package that was signed into law in December, also known as the Consolidated Appropriations Act of 2021, meant the agency wasn’t prepared for some tax code changes before the delayed filing season began on February 12.
The IRS also included an income look back rule that had allowed taxpayers to use their 2019 income to calculate any eligibility for the Earned Income Tax Credit or the Additional Child Tax Credit for the 2020 tax return.
All of this has slowed down the processing progress. It was reported that as of April 9, just 91.15 million individual tax returns had been processed. That is a drop of six percent from a year ago. Additionally, roughly 9.5 million fewer federal income tax refunds had been issued during the same time span, a decline of 12.3 percent.
According to TurboTax, there can be other factors that delay a return including a simple typo. If you or your accountant mixed up the digits on your Social Security number (SSN) on your filings, that will certainly cause a delay. Likewise, math mistakes are among the most common mistake—especially if you do the calculations by hand. A simple math error trickles down to later calculations and results in inaccuracies, which will also cause a delay in receiving a refund.
Some individuals try to beat the rush, and file as early as possible—but that can actually cause a delay as the IRS waits until its software is ready to process the returns. Some early filers have had to wait six to eight weeks to get their refund. For those who wait to the bitter end you’re not alone, and that means your tax returns could end up in a massive queue.
Another reason could be that you may have owed some back taxes, and the IRS took the refund from this year to pay any federal taxes you owe. In that case, instead of waiting for a refund check to arrive, you should watch for the IRS notice CP49, Overpayment Applied to Taxes Owed. Additionally, the Treasury Offset Program (TOP) allows the IRS to take or reduce your refund to pay other non-tax debts including past-due child support; other federal agency payments, state taxes; or unemployment compensation repayments.
Peter Suciu is a Michigan-based writer who has contributed to more than four dozen magazines, newspapers and websites. He regularly writes about military small arms, and is the author of several books on military headgear including A Gallery of Military Headdress, which is available on Amazon.com.