With the arrival of the Tax Day deadline on April 18 now upon taxpayers, it appears that millions of Americans will be rushing to meet that important deadline or face potentially hefty penalties.

According to personal finance expert Susan Tompor at the Detroit Free Press, “tens of millions of tax returns will flood the Internal Revenue Service (IRS) now that the April 18th filing deadline is here.” She also warned that the “headaches of the latest tax season—and last year's leftover troubles—will linger in the months ahead.”

Throughout much of the pandemic, the IRS has been dealing with acute staffing and budget issues. And that has been further exacerbated by the 20-plus million unprocessed personal tax returns and correspondence that the agency entered this tax season with.

“The IRS has to get current with not only prior year's but this year's tax returns before they move into the next filing season without this albatross around its neck,” Erin Collins, the national taxpayer advocate, told Tompor. “Because in order to move forward we need to get current,” she added.

What this likely means is that many taxpayers will have to continue to be patient while waiting for their refunds. In fact, some early filers who mailed in their paper returns in early February still haven’t seen a dime of their tax refund that they are entitled to.

“If they file through paper, unfortunately, taxpayers, they're going to go to the back of the line. The IRS is processing last year's returns first before they get to the paper returns this year. If you have a refund situation, you have to make a decision. Are you willing to wait?” Collins noted. “If you need that refund sooner, I would highly recommend that you file electronically. If there's not a problem with a return, those returns are sailing through. Typically those refunds are paid under that 21-day period,” she continued.

However, not all electronically filed returns will speed up refunds within that three-week timeframe. If there are any inconsistencies found regarding the reported numbers and credits, taxpayers will likely face delays due to a manual review of the return.

Earlier this month, IRS commissioner Chuck Rettig sounded the alarm before the Senate Finance Committee that more taxpayers could see refund delays if changes aren’t quickly made at the beleaguered agency. “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,” he continued. 

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

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