IRS tax refund delays likely in 2022: Taxpayer Advocate

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Tax season is officially set to begin on January 24. And according to the Taxpayer Advocate Service, an independent watchdog and advocacy group within the IRS, “the outlook for the upcoming filing season is bleak.”

The comments came in the group’s annual report to Congress, released by its leader, National Taxpayer Advocate Erin M. Collins, on Wednesday. While she acknowledged the quick work the IRS did last year with child tax credit and stimulus check payments, she didn’t dilute the agency’s shortcomings. Collins described 2021 as “the toughest year taxpayers and tax practitioners have ever seen.”

Even now, the IRS is still processing millions of 2021 tax returns, unprocessed forms, and unanswered customer service requests. It’s scrambling to keep up with pandemic programs like stimulus checks and child tax credit advance payments. It is underfunded and overstretched. And there’s a good chance that all of this will lead to further chaos.

The backlog of returns and the IRS’ meager budget are among many factors that may “negatively impact the 2022 filing season,” according to the report.

Case in point: The IRS is struggling to deal with the “historical” level of calls from confused taxpayers. Last year, only 11% of the 282 million phone calls received by the IRS were answered by representatives.

Even more alarming: the report used the word “delay” 277 times. In fact, he said, “the unprecedented processing and refund delays experienced by taxpayers in 2021 could be just as severe, or even worse, in 2022” if certain improvements are not made.

How to Avoid Late Tax Refunds in 2022

You don’t necessarily need to panic. Many tax returns and refunds passed through the IRS system without incident last year. The problem is that those who don’t have really not.

Usually, the IRS issues 90% of refunds within 21 days of receiving a person’s tax return. But as of Dec. 23, the IRS had 6 million unprocessed individual returns; for those with errors or who require special handling by IRS employees, refunds can take up to 120 days, depending on the agency. Over 2 million amended returns are also being cleared, which can take over 20 weeks.

Collins recommended a slew of solutions, and clearly the IRS is trying to get back on track as best it can. Commissioner Chuck Rettig said in a recent press release that “IRS teams have been working tirelessly over the past few months to prepare.”

But there are steps you can take to maximize your chances of receiving your refund in a timely manner.

First, file your taxes electronically (if you can). Last year, the IRS received more than 17 million paper individual tax returns, some of which took the agency “at least eight months” to process, according to the report.

Depending on your income level, you may qualify for the IRS Free File program, which allows Americans to file their federal taxes for free using an online tax preparation service. The Tax Day deadline is April 18 for most people this year, and the sooner you file, the sooner you can (theoretically) get your tax refund.

Second, check your numbers. Math errors take time for the IRS to resolve. The report specifically highlights how people who don’t properly reconcile things like their third stimulus checks and child tax credit advance payments could experience delays.

To do this, you’ll want to look for IRS letters 6475 and 6419, which are currently being mailed out. They’ll show the amount of money you’ve received and provide tips on how to claim credits for funds you think you still owe.

Third, opt for direct deposit. Taxpayers with direct deposit information on file with the IRS typically get their refunds faster than those who have to wait for paper checks in the mail. It’s safe and you can split your refund between accounts if you wish. Plus, it will help you with any future stimulus checks and/or child tax credit payments owed to you.

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