Americans can start filing their income tax returns Jan. 24, but existing backlogs and longstanding operational problems at the IRS, aggravated by the coronavirus pandemic, are likely to make for a frustrating filing season for taxpayers and tax preparers, a Treasury Department official said Monday.
The IRS is still dealing with backups in processing returns from the past two filing seasons. While the tax collector typically has about about 1 million pieces of unopened mail, including tax returns, in its backlog when starting a new filing season, it had 6 million unprocessed individual returns as of Dec. 23, the most recent date for which data is available on the agency’s website.
More than 150 million individual income tax returns typically roll in over the course of a few months.
Tax returns for 2021 are due April 18 for most individual filers, a few days after the normal April 15 deadline due to a holiday in Washington, D.C., though extensions can be requested. This year’s start and end dates, announced by the IRS on Monday, are more in line with historical norms, which have been upended since 2020 because of the pandemic.
Last year, the IRS held off the start date to Feb. 12, to give the agency extra time to reprogram operations based on tax law changes passed in late 2020.
There haven’t been any discussions about delaying the deadline beyond this April, the Treasury official said, though that’s happened each of the last two years when the due date was reset to May 17, 2021, and July 15, 2020.
Disruptions from the ongoing pandemic have been made worse by years of budget cuts, a shrinking workforce and outdated technologies at the IRS. President Joe Biden and Democrats in Congress want to boost spending on the IRS to improve enforcement and other agency functions like customer service, but the Treasury official blamed Republicans for blocking fresh funding.
To improve odds of faster tax return and refund processing, taxpayers should take several steps, including filing electronically and providing direct deposit information rather than requesting paper checks for a return, the official said.
E-filing is more important than ever this year, the official said.
Though most taxpayers file electronically, some 10 percent of total tax returns still get sent to the IRS on paper, and a good chunk of those paper returns remain unprocessed, caught up in a mail backlog that developed early in the pandemic. For millions, that’s meant delayed refunds and incorrect penalties and assessments by the IRS because agency employees have yet to process all of the mail that poured in.
According to the Treasury official, taxpayers should also turn to the IRS website for self-help answers to questions rather than dialing the IRS, given the low level of service from perpetually flooded phone lines. They should also check the accuracy of their tax returns before filing, as mistakes trigger reviews that can move slowly because of the existing backlog.
Extra attention is warranted this year due to economic stimulus checks the IRS previously sent out and advance Child Tax Credit payments, which more than 30 million households received monthly from July through December. They can claim an extra six months’ worth of the credits when they file their returns.
The IRS is sending taxpayers separate letters on stimulus and child credit payments they received to help them accurately record the information on their upcoming returns.
The IRS could get more individual income tax returns than normal this year because the stimulus and child credit payments may trigger tax returns from people who typically earn too little to file. Still, that extra workload shouldn’t affect IRS processing, the Treasury official said.
The agency should be able to process most refunds within three weeks, its normal turnaround time, the Treasury official said.