Odds are you’ve filed your taxes in the past year, or maybe you’ve been keeping up with the latest tax news, so you might be privy to the backlog that’s currently bedeviling the IRS.
According to the IRS website, they are open and processing mail, tax returns, payments, refunds, and other correspondence. But the shutdown in 2020 severely pushed these procedures back and has subsequently caused many delays in processing.
1. What is the backlog?
According to reporting on December 31st, 2020, the backlog started as a mass of 7.9 million paper-filed business tax returns to the IRS. For comparison, on the same date the year prior, there was less than 240,000 outstanding returns.
In July of 2021, the IRS reported a backlog of 35 million tax returns, both paper and direct deposit, that needed manual processing.
2. What caused the backlog?
Tax processing centers were forced to close April of 2020 in response to the Covid-19 pandemic. During this closure, the deadline for return filing was pushed to July from April. This included 2019 individual and business returns, and federal income tax payment deferments. Unfortunately, this deadline change also caused the IRS to apply erroneous penalties to numerous payments and tax forms.
Tax centers were not able to process tax returns during the closure, which put things like refunds massively behind schedule. Many taxpayers still haven’t received refunds.
According to the Effects of the COVID-19 Pandemic on Business Tax Return Processing Operations report by the IRS, released in September of this year, the influx of 2020 and 2021 legislation enacted to assist businesses added to the delays. Some of this legislation includes the Families First Coronavirus Response Act, The Coronavirus Aid, Relief and Economic Security Act, and the American Rescue Plan Act.
3. How long will you be waiting for your refund?
While the standard waiting period is typically three – six weeks, many have waited months for their forms to be processed. Unfortunately, the phone lines are delayed as well. CBS news reports that only 3% of the 85 million calls actually reached a customer service representative.
The IRS commissioner, Kenneth Corbin, has released a few statements on the future of the IRS and how it plans to move through the immense backlog. Corbin says that they have hired 3,500 of the planned 5,500 employees amid the incoming 2022 tax season. In good news, there has been some movement in processing.
Since there is hope on the horizon, we urge our clients to remain vigilant and respond to any inquiries from the IRS.
North Georgia Tax Solutions hopes this provides some insight on the IRS backlog and exactly what happened to cause it. Ensuring that your taxes are filed correctly the first time around can help speed up the already lengthy process of getting your refunds or payments. Hiring a tax accountant is the best way to maintain your peace of mind during the busy tax seasons. Learn more about North Georgia Tax Solutions or contact us today!