Tax Refund Delays: New Laws, Backlogs and Fewer Employees Could Force Setbacks

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Tax season has started, but the Internal Revenue Service (IRS) is warning that there may be delays in processing refunds due to the pandemic, several tax law changes and fewer employees.

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The 2022 tax filing season started Jan. 24 and more than 160 million individual tax returns for the 2021 tax year are expected to be filed, with most before the April 18 tax deadline, according to the IRS.

Deputy Assistant Treasury Secretary Natasha Sarin said the agency is operating with “thousands fewer employees than it needs,” CBS reported. In addition, a report by the National Taxpayer Advocate revealed the IRS received 282 million phone calls from taxpayers last year, but was only able to answer about 11% of them, according to CBS.

Sarin told CBS that phone wait times could be even longer this year, as the pandemic has limited the number of agents available. “The IRS isn’t going to be able to answer as many of those calls as it should be able to,” she told CBS. “We know that that’s going to be hugely frustrating for taxpayers in a complex filing season in the middle of a pandemic.”

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To further complicate the matter, the IRS is also still working through backlogs, CBS reported, as early in the pandemic, some of the tax processing centers were closed entirely, which stopped the processing of some returns in 2020. And they’re trying to catch up using outdated methods. Earlier this month, the IRS said on its website that those taxpayers need to take special care this year due to several critical tax law changes that took place in 2021 and ongoing challenges related to the pandemic.

“IRS employees are working hard to deliver a successful 2022 tax season while facing enormous challenges related to the pandemic,” IRS Commissioner Chuck Rettig said in an announcement on Jan. 24. “There are important steps people can take to ensure they avoid processing delays and get their tax refund as quickly as possible. We urge people to carefully review their taxes for accuracy before filing. And they should file electronically with direct deposit if at all possible; filing a paper tax return this year means an extended refund delay.”

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The IRS added that for most taxpayers who file a tax return with no issues, they should receive their refund within 21 days of when they file electronically if they choose direct deposit, according to the announcement — similar to previous years. Last year’s average tax refund was more than $2,800.

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“There are simple steps that people can take that will help them navigate this challenging tax season,” Rettig said. “Filing electronically and using online resources instead of calling are just some of the steps that can help people avoid delays.”

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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