Haven’t received your tax refund yet? Welcome to the club. A historically high number of taxpayers are experiencing delays in receiving their tax refunds this year. The Internal Revenue Service (IRS) finished the tax filing season with over 35 million unprocessed tax returns, four times more than the last, pre-COVID-19 season in 2019. This comes as a result of a number of challenges the IRS has been faced with over the last year. To start, a pandemic-related evacuation order severely restricted employee access to IRS facilities. The IRS was also tasked with additional responsibilities related to three rounds of stimulus payments, revised rules for unemployment insurance, and implementing the advanced Child Tax Credit payments. To add to that, a number of tax code changes over the last year has resulted in an increased number of returns requiring manual processing, further contributing to the processing backlogs.
Should I call the IRS to ask about my refund?
A call to the IRS might not get you very far this year, assuming you are able to get through to an agent. IRS Commissioner Charles Rettig testified at a recent Congressional hearing that only about 2% of all calls were answered during the busiest part of the recent filing season. During the 2021 filing season, the IRS received over 100 million telephone calls, four times as many as the season prior. This massive number of calls resulted in poor service from the agency and only a fraction of callers reached help. These issues have continued even after the filing season, as efforts of IRS staff are geared towards working through millions of unprocessed returns. The IRS urges individuals to visit their Refund FAQ page for more information on tax refunds, and to use the Refund Status tool to check the status of their tax refunds. Below are links to both of these pages:
FAQ Page from the IRS
IRS Refund Status Tool
Receive a notice from the IRS? So did most people.
Our clients have seen a flurry of notices from both the IRS and Virginia Department of Taxation in the last 2 months, and we suspect they are going to continue since both the IRS and Virginia are so backlogged. During the last 12 months, with personnel shortages and the mail backlogs at both the federal and state level, we have seen an increasing number of notices which have been computer-generated, most of which are incorrect. Both agencies are operating with less people, more work, and archaic technologies.
Unfortunately, there is no magic bullet to resolving a notice sent in error. Your best bet is to make sure your expectations are realistic. Understand it’s going to be a long process and trust if you filed everything correctly and on time, you should be fine.
One of the more common errors we are seeing is the department that actually processes your return, the one that receives payment and the collection arm are not all talking. We have had countless clients who filed on time and made the correct payment still receive a notice about a late payment. In these cases we typically prepare a written response packet with copies of the front and back of their check, which should allow the agency to locate your original payment and apply it accordingly. Even if the original check had your Social Security Number in the memo section, they frequently seem to have difficulty applying payments when they taxpayer’s name is not on the check itself.
Unfortunately, there is currently no proactive way to head off notices from these agencies. We get it, no one likes receiving a notice from the IRS or any state taxation department. They often make it scarier then it needs to be. It’s important to understand, if you filed correctly and paid on time, with perseverance and our help this will get resolved. You aren’t alone in receiving these notices in error. Please don’t hesitate to reach out to your team at YHB if you have questions.