Tax Refunds Could Be Delayed Amid IRS Backlog Of Unprocessed Returns

The IRS has been swamped with a backlog of unprocessed tax returns amid the pandemic that could delay tax refunds, according to a report from the Treasury Inspector General For Tax Administration.

“Of particular concern is the continued challenges in hiring sufficient staff needed to both continue to work backlog inventory and process Tax Year 2020 tax returns at the same time,” the report stated. “This could further affect taxpayers awaiting refunds and additional Recovery Rebate Credits associated with these Tax Year 2020 returns.”

The IRS had over 11.7 million paper-filed tax returns from individuals and companies that have yet to be processed as of Dec. 25, according to the report. The need to redirect resources to issuing further stimulus payments or an unexpected closure of IRS Tax Processing Centers because of the pandemic could impact the IRS’s capacity to fix these backlogs.

Much of the work done at the IRS’s Tax Processing Centers is not well-suited to a remote work climate, the report stated. That works involve handling mail and paper tax returns.

The IRS had over 2.9 million pieces of mail that was not opened and 4.7 million individual hardcopy tax returns to process as of Nov. 14, according to the report.

Furthermore, the IRS had in excess of 600,000 returns in its Error Resolution inventory, almost 3.7 million cases in its Accounts Management inventory, and in excess of 1.3 million returns in its fraud program inventories as of Nov. 14, the report stated.

The IRS also stopped answering the lion’s share of its toll-free taxpayer assistance telephone lines — 81 out of 87 of them — and shuttered each of its 358 Taxpayer Assistance Centers when the IRS closed its offices throughout the country, according to the report. However, the IRS had opened up 80 of its toll-free telephone lines once more as of Nov. 5 and 263 of its Taxpayer Assistance Centers as of Nov. 16.

The news comes after it was reported in early January that approximately 13 million defunct accounts inadvertently received stimulus payments by the IRS.