With taxpayers starting to send in their 2021 returns to the IRS, many are hoping for a quick turnaround on their refunds. But people with a question or processing delay this season may find it difficult to get an answer from the IRS, either by phone or mail.
The tax agency itself is warning taxpayers that they’re unlikely to get through to an IRS employee via its phone lines this tax season: “We expect our phone lines to be jammed up for the foreseeable future,” said IRS Commissioner Chuck Rettig on a January conference call with reporters. “Demand is significantly up.”
Call demand reached a record during the prior tax year, with Americans placing 282 million telephone calls to the agency, according to the National Taxpayer Advocate, an independent division of the IRS that’s dedicated to helping taxpayers. Of those calls, only about 11% were answered.
Rettig said the agency this year expects an “extremely high call volume this season” as well.
And, if your tax return has a glitch, the IRS will likely contact you via mail to clarify the issue — but don’t count on the tax agency quickly reading your response. The IRS is already sitting on a backlog of almost 5 million pieces of mail from taxpayers and accountants — on top of a backlog of 6 million unprocessed individual tax returns, according to the NTA.
Both logjams are causing holdups and delays in processing returns and solving taxpayer problems, experts say. Tax professionals say it takes hours to get through to the IRS by phone — if they’re even able to reach anyone. All of this is prompting a primal howl from tax professionals and taxpayers.
“It creates a mess,” said Thad Inge, legislative counsel at the National Association of Enrolled Agents, on a conference call last week with tax professionals to discuss IRS issues including the correspondence backlog. “It creates harm to the taxpayer.”
It is taking the tax agency almost six months to respond to taxpayers’ correspondence — such as letters sent by taxpayers to the IRS after the agency asks for more information — compared with 45 days, prior to the pandemic, Inge noted. The IRS largely doesn’t allow taxpayers to contact it through secure email, instead directing them to write via the U.S. Postal Service.
But, as the NTA said in January, paper has become the IRS’ “kryptonite” during the pandemic.
Experts say the IRS needs more funding to hire additional employees and upgrade its systems. President Joe Biden’s Build Back Better Act would have directed $80 billion toward the tax agency, but the future of that legislation is unclear after losing support from Senator Joe Manchin, a Democrat from West Virginia.
IRS: “Stopping these letters”
In response to concerns from a coalition of tax organizations including the NAEA as well as lawmakers, the IRS on Thursday said it would suspend some automated notices, which are letters that can be triggered by issues ranging from failure to make a tax payment to failure to file.
But during the pandemic, the taxpayer may not be at fault for issues for which they may have received notices. For instance, the IRS last year sent automatic notices to taxpayers for whom it had no record of receiving a tax return. But in many cases, the taxpayer had actually filed their return — it was simply caught up in the IRS’ backlog.
If taxpayers responded to the IRS, those mailed responses were then likely to get trapped in the agency’s correspondence backlog, adding to taxpayers’ stress.
The IRS on Thursday acknowledged that the “the tax return may be part of our current paper tax inventory and simply hasn’t been processed.”
It added, “Stopping these letters — which could have otherwise been sent to thousands of taxpayers — will help avoid confusion.”
However, the IRS said it can’t stop all automated notices, adding that many are required to be issued within a certain timeframe to be valid. “This means they must be sent, absent congressional action,” the IRS said.
The American Institute of CPAs called the IRS’ decision “a positive first step,” but added that the tax agency could do more to reduce unnecessary automatic notices. The group said it disagrees that congressional action is needed to suspend more automatic notices sent to taxpayers. It’s also calling for additional help for taxpayers, such as relief from the underpayment and the late-payment penalty for the 2020 and 2021 tax year.
“Where’s my refund?”
Tax professionals said they also would like to see improvements on the IRS’ “Where’s my refund?” site, which is designed to provide taxpayers with guidance on when they’ll receive their check. About 3 in 4 taxpayers receive a refund, which last year averaged about $2,800 — often the biggest check a family will receive all year.
But the “Where’s my refund?” site doesn’t provide information to taxpayers in some situations. For instance, a tax return must be accepted by the IRS to show up on the site — a huge issue during the pandemic when millions of unopened paper tax returns were literally stored in trailers. People mired in that backlog were unable to get clarity from the “Where’s my refund?” site.
Even people who filed electronic returns face limited information from the “Where’s my refund?” site, tax professionals said. That’s because the tool typically doesn’t provide specifics about what’s causing a delay, according to the NTA.
“We had a [client] who filed his tax return in February — his refund wasn’t processed until October,” said Carlos Lopez, founder and CEO of the Latino Tax Professional Association. “Every time he went to the website, it said, ‘Being processed, being processed.’ That just isn’t good enough,” Lopez said.
NTA: Provide weekly data
The National Taxpayer Advocate is also calling on the IRS to create a more robust online system that will provide more detailed information to taxpayers about their refund status.
“The IRS should provide additional detail regarding the current stage of refund processing, including an anticipated timeline for processing,” the NTA said in its January report to Congress. “More specific messaging updated weekly would increase taxpayer satisfaction” and decrease the call volume to the IRS, the NTA said.
The IRS last week said most taxpayers will receive their refund within 21 days — as long as they file electronically, ask for direct deposit and have no problems on their tax returns.
Asked how long it could take to get a refund if, say, someone files on paper or has a mistake in their returns, IRS chief taxpayer experience officer Ken Corbin said, “Right now we aren’t really sure.”
