“We have this really large tax bill hanging over our heads that we can’t do anything about.
Her family doesn’t know when the tax debts will be withdrawn from her account or how big those increments will be. But that 2020 tax return, which requested installment payments, still hasn’t been processed. Upon discover her identity was stolen, she was required to file by paper. Evan Schultz, a 26-year-old from a Columbus, Ohio suburb, is in that boat.īecause her husband was an independent contractor last tax year, they owed money in taxes to the federal government. Meanwhile, roughly a third of taxpayers who are owed refunds apply them towards personal debt almost another third relies on the deposit for everyday expenses like groceries and rent.Īnd for those that owe money to the IRS, delays in the agency withdrawing the taxpayers’ funds can also be anxiety inducing. About 30% of families count their annual tax refund as their largest cash infusion of the year, according to a 2019 study by JP Morgan Chase Institute. For others, delayed processing times and difficulty connecting with the IRS can mean severe financial distress.
”įor some, all of this amounts to an annoying headache. Filers “wrote more paper correspondence, or filed another return, which of course hadn’t gotten processed.
“What we saw was kind of a circular impact,” says Collins, describing the 2021 tax filing season. The lack of communication creates a negative feedback loop: taxpayers who can’t get in touch with the IRS grow concerned that their paper-filed tax return forms were not received via mail, causing them to file more returns, amendments, and correspondence by mail, which further bogs down the already beleaguered system. During the 2021 tax filing season, the IRS received 171 million phone calls taxpayers were able to connect with an IRS employee in only about 9% of cases. Taxpayers, meanwhile, can’t get the answers they need. In roughly the same time period, the IRS’s budget was reduced by nearly 20% in inflation-adjusted dollars. From 2010 to 2020, the IRS lost nearly 35,000 full-time employees. The IRS is already struggling to maintain and hire enough employees to do the labor intensive work of processing the increased number of paper returns. The IRS is considering ways it which it can expedite how it processes paper returns, and on ways to mitigate fraud, but those proposed solutions don’t help people who are going to have to wait the better part of a year to see that refund check this year.
E FILE TIME TO RECEIVE REFUND MANUAL
These modifications required millions of taxpayers to file amended returns or addendums to take full advantage of the pandemic changes and benefits, resulting in a backlog of 23 million returns requiring some sort of manual processing left over from the 2021 tax filing season at a time when the IRS is least equipped to manage it. But that may be wishful thinking, due to an already-formidable backlog at the IRS, fueled in part by complicated, pandemic-era legislation, including three rounds of stimulus checks, which came with varying definitions of dependents and multiple changes to how the IRS calculates a business’ net operating losses. And that takes months.Ĭollins says the goal is for this years’ paper-filed returns to be processed by the end of the 2022 calendar year. Because the IRS does not have an automatic, machine-based system to process such filings, a real human has to manually enter information from each paper tax return into an IRS computer. They are directed instead to file by paper. Because only one tax return can be filed electronically per Social Security Number per year, when victim attempts to e-file, they are met with an error message alerting them that a return has already been filed in their name.
When a scammer fraudulently e-files a tax return, the real person whose social security number has been used is catapulted into a bureaucratic hellscape.
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