Between COVID-19, stimulus tax changes, budget cuts, and a depleted workforce, it’s no wonder the IRS can’t keep up with processing millions of federal income tax return. It could be a while before you see your money if you’re still waiting on a tax refund.
Levy & Associates Tax Consultants describes the problems affecting tax refunds making it into bank accounts across the country.
Labor Shortages at the IRS Have Delayed Income Tax Return Processing
The IRS has a backlog of millions of income tax return documents to sift through and few resources to manage the task. The IRS is responsible for enacting tax reforms passed by Congress, an especially daunting task in the wake of COVID-19 stimulus checks, tax cuts, bailouts, and other fast-tracked programs to keep the economy afloat during the pandemic.
Since 2020, the IRS has also lost parts of its workforce to COVID-19 deaths, disability from long COVID, and typical retirement rates. Like many other employers, the IRS is also facing worker shortages for hiring.
Still, in the last year, the IRS has managed to fill vacated roles with new hires and reassign personnel to address the backlog to make progress on old income tax return documents. The problem with the backlog is that most of the unprocessed returns are on paper.
Better Luck Next Time: Filing a Tax Return Electronically
The IRS has already processed most e-filed tax returns. Many tax professionals recommend filing a tax return electronically to avoid delays in receiving your federal tax refund.
There are times when you may have to file a paper tax return, such as:
- Including special tax elections on your return, such as an S-Corp election
- Amending a tax return
- Attaching required documents
- Re-filing after the IRS rejected your e-file return
- Requesting injured spouse relief
- Filing as a victim of identity theft
The IRS even recommends that most people e-file their tax returns to get their refunds as quickly as possible. While you can file a paper return out of personal preference, e-filing is safer and faster and carries less risk of an input error when the IRS manually adds your information to their systems.
If you’re waiting for your tax refund, you can go to the IRS.gov website and use the “Where’s My Refund?” tool to learn more about the status of your tax return and what stage of processing you’re in.
What About My State Tax Refund?
If you live in a state with a state income tax, your state tax return likely has less of a waiting period to receive your refund, even if you filed on paper. The average waiting period for a state tax refund is 30 days if you filed electronically, and possibly as long as three months if you filed a paper return.
Nine states don’t have a state income tax: Wyoming, Washington, Texas, Tennessee, South Dakota, New Hampshire, Nevada, Florida, and Alaska. If you live in a state where you need to file a state tax return and are still waiting for your state tax refund, you will need to contact your state tax agency or Department of Revenue to inquire about your refund status.
Contact Levy & Associates Tax Consultants for Help With Your Tax Refund
If you need tax resolution assistance in dealing with the IRS, contact us Levy & Associates Tax Consultants at 1-800-TAX-LEVY or contact us online for a free tax review.