Tax Day Countdown: Americans Already Seeing Large Average Refunds

Tax Day Countdown: Americans Already Seeing Large Average Refunds

The average tax refund came in at more than 11 percent higher than last year’s amount of $2,893.

With only a week to go before tax day on April 18, many Americans who haven’t filed their taxes are likely scrambling to meet the deadline.

In fact, according to a report released by IPX 1031, nearly a third of Americans don’t file until the last minute. Residents of Nevada are on the top of the list, followed by Hawaii, Georgia, Alaska, and California.

Still, the Internal Revenue Service (IRS), according to its latest release, has already sent out more than sixty-three million tax refunds worth over $204 billion in total. The average tax refund amount came in at $3,226, which is more than 11 percent higher than last year’s amount of $2,893.

Clearing the Massive Backlog

While the IRS appears to be running smoothly on the surface, the agency is still working through a massive backlog of tax returns and correspondence from last year.

It was just last week, per Fox Business, that IRS Commissioner Chuck Rettig warned the Senate Finance Committee that more taxpayers could see refund delays if changes aren’t made quickly.

“The IRS is serving more people and entities in a global environment than ever before while handling new and bigger responsibilities,” he said. “At the same time, we have experienced delays in updating our IT systems, which means the IRS and taxpayers must continue to use certain paper-based processes.”  

But Rettig previously told the House Ways and Means Committee that he expects the agency to fully clear its backlog “absolutely before December.”

“Barring any unforeseen circumstances, if the world stays as it is today, we will be what we call ‘healthy’ by the end of calendar year 2022, and enter the 2023 filing season with normal inventories,” he said.

False Promise?

However, there seems to be serious doubt about the beleaguered agency’s ability to come through on its ambitious promise.

“The commissioner said that he commits [the IRS is] going to get through all of the returns by December of 2022, and I would love to see that, but I will be circumspect in thinking that that’s actually going to happen,” Nina E. Olson, executive director of the nonprofit Center for Taxpayer Rights, recently told The Hill.

“What will happen to taxpayers—and this will put pressure on preparers—is that their returns are going to be held up. They will be stopped by any number of things that happen in the IRS return processing system,” she added.

To address the stubborn backlog, Rettig noted that the IRS is committed to hiring 5,000 workers in the coming weeks and filling another 5,000 positions next year. That initiative, however, hasn’t gone according to plan.

“The agency has so far onboarded just 2,000 of the 10,000 new workers it intended to hire,” Fox Business writes.

Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center, told The Hill that “they won’t get 5,000 people on board before the filing season is over.”

“You have to find people, you have to bring them on board, and then you have to train them,” she added.

Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.