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IRS Paper Tax Return Backlog Delays Refund Checks

Americans face long delays in IRS responses and phone calls that often go unanswered

Tax Examiners working on a paper backlog at the Internal Revenue Service's facility on March 31, 2022 in Ogden, Utah.
The Washington Post / Getty Images

Hobbled by antiquated technology, staff shortages and a dearth of automated systems, the IRS had a backlog of 21.3 million paper returns at the end of May, up from 20 million a year earlier, when backlogs started to pile up in the aftermath of COVID-19, according to a report by Erin M. Collins, national taxpayer advocate at the Taxpayer Advocate Service, an independent organization within the IRS. Currently, every digit on a paper return must be manually keystroked into IRS systems by agency workers, a process that Collins referred to as “crazy” in the tech-driven world we live in.

In the report, Collins wrote: “When I released my Annual Report to Congress six months ago, I wrote that ‘Paper is the IRS’s Kryptonite, and the agency is still buried in it.’ Fast forward to this Objectives Report: It’s Groundhog Day.”

Along with waiting longer for their refunds, taxpayers are experiencing lengthy delays in responses from the IRS. Through May 21, the IRS processed 5 million responses to Americans’ proposed adjustments to their returns, taking an average of 251 days to do so; that’s up from 74 days in fiscal year 2019, the most recent non-pandemic year. And so far in the 2022 tax-filing season, the agency has received 73 million calls from taxpayers but have answered just 10 percent of those calls (a tad better than the 9 percent in the 2021 season).

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Back to normal?

The IRS says it is committed to reducing the backlog of paper returns to a “healthy" level by the end of the year. And there are signs of progress. The unflattering report from the national taxpayer advocate was published a day after the IRS announced that it would finally erase last season’s backlog by the week ending June 24.

Americans who file returns electronically have enjoyed a much better experience. Electronic returns without errors have been processed within eight to 21 days, according to the Associated Press, citing a letter from the IRS and the U.S. Treasury Department addressed to Sen. Ron Wyden (D-Ore.), the chairman of the Finance Committee.

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To avoid delays associated with paper tax returns, e-filing is the way to go for a number of reasons, including speed, accuracy and safeguarding your key personal data, advises Mark Steber, senior vice president and chief tax information officer at Jackson Hewitt Tax Service. E-filing is the most common, with 80 to 90 percent of all returns submitted electronically, he says.

E-filing is “faster because it’s directly filed into the IRS database,” Steber says. “You don’t have to worry about any envelopes and snail mail or wait on IRS personnel to receive and rekey your information into their databases.” It’s safer because it helps you avoid identity theft, as your data isn’t as vulnerable as it is sitting in a mailbox. Plus, he points out that your return will be more accurate due to software that checks for errors before you send it to the IRS. “When filing a paper return, you may make a simple mistake, which cannot be checked and corrected until after the IRS receives it through the mail and enters it into their system.”

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The letter from the IRS and the Treasury Department to Wyden also highlighted some of the fixes they say are needed to alleviate similar-sized backlogs in the future: “What the agency requires to avoid a crisis like this in the future is sustained, multiyear funding to invest in overhauling antiquated technology, improving taxpayer service, and increasing voluntary compliance.”

The bottom line is that refund delays are causing budget problems for many Americans. “These processing delays are creating unprecedented financial difficulties for millions of taxpayers and outright hardships for many,” Collins said.

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