Is your tax refund delayed? How to deal with the big bad backlog at the IRS
The IRS may be facing delays, but you should still try to contact the agency if there's a problem with your return
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Millions of people are waiting for their tax returns because of pandemic-related delays at the IRS.
A report from National Taxpayer Advocate Erin Collins said the backlog includes 16.8 million paper tax returns awaiting processing and 15.8 million returns suspended during processing that require further review.
The pandemic exacerbated existing issues at the IRS, including outdated technology, staff turnover, quickly changing tax laws, and inconsistent funding levels, said Cari Weston, director for Tax Practice and Ethics Issues with the American Institute of Certified Professional Accountants. During the pandemic, many employees were restricted from accessing the IRS' facilities for processing returns and other correspondence.
"There were a lot of things sitting there not getting processed, and a lot of the frustration was, while the IRS wasn't able to process these paper things, the IRS' automated systems were still working in the background," Weston said.
For example, if you got a letter from the IRS saying you owed them money and you sent in documentation proving that you did not owe them money, it might sit unopened in a processing center. Meanwhile, the IRS' automated systems would assume you never responded and take a more drastic step, like putting you in collections, Weston said.
So whether you want to prevent the IRS from taking that step or you’re waiting for a big refund, here’s how to break through the delays at the IRS.
For years, Weston represented people who owed millions of dollars to the IRS. They often had a tendency to avoid the problem by ignoring IRS correspondence. This often made things worse.
The IRS may be facing delays, but you should still try to contact the agency if there's a problem with your return, Weston said.
"The IRS will work with you," she said. "They might be slow, they might make mistakes, but you have to communicate."
With mail still backed up, Weston says to call the IRS about any issues, including a delayed return. This has its issues too. Only 7% of taxpayer calls reached a telephone assistor during tax season, according to the National Taxpayer Advocate. But you at least have a chance of having your problem acknowledged by a human, which may not be the case with a letter.
If you have to mail something in, Weston recommends faxing a copy as well. If you, like everyone except the IRS, live in the present day and lack access to a fax machine, you can send a fax online, per this guide from PCMag. Faxes can get processed digitally, while mail has to be opened by a person, so it's possible a faxed document will be seen sooner, Weston said. Indicate on your mailed copy that you also sent a fax, so it's not double-processed.
You don't have your refund until you have your refund, no matter how much of a sure thing you think it is. If you were planning on buying something or paying off a bill with that money, you need to put it off or find another source of funds, because it could take months for the money to come through, Weston said.
If you expect to owe money, start tightening your budget. You can often negotiate a payment plan with the IRS to stave off attempts to garnish your wages if you can't pay the full amount.
"They will stop collection activities as long as you're following the agreement," Weston said.
If your tax issue is serious enough, Weston recommends consulting a tax professional like a CPA. If that's out of reach, the federal government has options for free tax assistance for low-income and elderly people.
You'll know the issue is serious if the IRS starts sending certified mail. That means "they're about to come after you," possibly by garnishing your wages or putting a lien on your property. By that point, it’s worth it for you (or the tax professional you hire) to spend a few hours trying to reach someone at the IRS.
While the current backlog is the worst Weston has seen in her 25-year career, she’s seeing signs of progress. In its response to the Taxpayer Advocate’s report, the IRS, which did not respond to a call from Easy Money seeking comment, said it was working to improve response times by expanding online, in-person, telephone, and paper services and training more staff.
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