Waiting to Hear Back From the IRS? You Aren’t Alone
Although the Internal Revenue Service was never known as the most efficient of agencies, the IRS operated in a regular and consistent manner prior to the COVID-19 pandemic. Refunds were issued swiftly and responses to calls and correspondence came in a reasonable amount of time. When the COVID-19 restrictions came about, a perfect storm of delays hit the IRS. Employees were sent home. Processing centers were shutdown. Millions of pieces of unopened mail piled up. Many employees could not work from home because of the secure nature of their tasks and the dated IRS computer system.
Congress also added to the pile of to-dos by making the IRS responsible for distributing the economic recovery payments (stimulus checks), not once but three times. Additionally, Congress made retroactive tax changes with the CARES Act in March 2020, which required the IRS to modify already filed tax returns for the 2020 filing season.
Then in December 2020, Congress passed last-minute legislation that made changes for the 2021 filing season. According to one of the IRS watchdogs, National Taxpayer Advocate Erin Collins, the IRS did not have time to adjust its systems for these changes and the Service was required to manually verify certain returns that elected to claim the 2020 earned income tax credit or the additional child tax credit. Unlike prior years, the IRS had to deal with a large volume of returns requiring manual reviews. By the end of the 2021 tax season, the IRS had over 35 million individual and business returns backlogged.
So, you could say it’s been a rough couple of years for the IRS.
Despite these challenges, the IRS is making its way through the buildup. As of July 2021, the backlog was down to 13.8 million.
If you are caught in the gridlock, there is not much to be done beyond being patient. However, if the IRS owes you a refund, the silver lining is that the IRS will likely pay you an annual rate of 3%. Although we’re not making excuses for the IRS, we wanted to let you know what the problems are. If you’re having trouble with contacting the IRS, let us know and we can help.