The IRS seems to be willing to do anything when it comes to collecting, and the same efficiency would be expected when it is the taxpayers who expect payment from the IRS, as in the case of refunds. In reality, however, it is a different story.
Since more than a year ago, we have seen a substantial delay in refunds, especially when they are requested manually through a paper sent by mail. Therefore, many wonders why this delay.
Are federal tax refunds delayed?
If the question is whether there is a delay: Yes, this is not speculation or miscommunication of information. There is a fairly obvious backlog of refunds when requested in non-electronic ways.
The delay has been going on since 2021 with the 2020 returns. And currently, there are clear delays with 2021 returns filed in 2022.
Although most people file their refunds electronically and get them within about 25 days, a fairly large group still files their refunds manually.
In 2021, almost 5 million refund statements were filed on paper, and only in 2022, in mid-June, was when they almost finished reviewing all the 2012 statements to proceed with the 2022 statements.
All of the above represents a huge delay, considering that the 2022 tax season started in January. Those who requested their refund manually at that time probably have not received it yet.
In short, a delay is much more serious than expected. It is normal when there is to delay, but at present, we are talking about months, from 4, 5, or 6 months in the delay of this year’s reimbursements.
Therefore, if you submitted a refund manually by sending the form by mail, you do not have to worry if your acquaintances who applied electronically already have their refund and you still do not.
What are tax refunds delayed?
As we have been telling you throughout the text, the problem with refunds is when they are made physically. In reality, it is not a matter of a whim of the Treasury but a terrible delay in the procedures.
With the advent of COVID-19, many institutions and government offices were forced to close due to contingency. During all that time, a lot of paperwork remained without anyone to review and approve it.
Only recently, the IRS declared that it would be able to start soon with all the paperwork for 2022, counting this year with more declarations than the previous one.
While last year they had almost 5 million physical returns, this year they have 8 million. So, if they are not organized properly, we should not be surprised by more delays than have already been caused.
The Tax Agency expects to complete the revisions of the year’s returns before the end of 2022. That is if there are no other problems with the agency or any other event out of the State’s hands.
In fact, for the IRS, the problem is so serious that they are urging those who have not yet filed their tax returns to do so electronically to avoid further accumulation of paperwork.
For many people, the problem is the taxpayers who continue to file an overwhelming number of paper returns of all types, amounting to more than 40 million in a single period.
For others, the problem lies in the inefficiency of the Tax Agency. The agency has an insufficient number of workers for the necessary formalities and delays.
So, it is not due to lack of money?
According to the Tax Authorities, the problem has been present since last year. As they processed each tax return, they made the corresponding refunds.
It is not money or any other kind of problem. It is only a collapse due to many paper applications and the time when they were not processed due to the quarantine.
Logically, as long as the returns and refund applications are not processed, it is impossible to return the refund money to the taxpayers. Because they cannot return the money, they are not sure whether it corresponds or not to the taxpayer.
In the prosecutions, they review all those aspects, check how much the refund amount and make sure they are in front of the right amount to proceed to release it and return it to the applicant.
Whether the IRS will meet its expectations of being paperless by 2023, one can only hope. Currently, there is not much hope.
Reportedly, as soon as they finish processing returns, new ones arrive to replace them.
For years I have studied American finance regulations. All the information in this blog is sourced from official or contrasted sources from reliable sites.
Salesforce Certified SALES & SERVICE Cloud Consultant in February 2020, Salesforce Certified Administrator (ADM-201), and Master degree in “Business Analytics & Big Data Strategy” with more than 13 years of experience in IT consulting.