The IRS is not on time on almost 7 million tax returns, an early warning that the company is beneath stress

There are 6.7 million returns that have not yet been processed, more than three times as many as in the same period last year when fewer than 2 million returns were delayed, according to IRS data.

The delays are largely due to a year’s worth of extraordinary stimulus measures that have resulted in more complicated tax filings for millions of Americans. The IRS was already trying to adjust after the December stimulus package. The latest package, the American Rescue Plan, adds even more responsibilities to the agency, including sending out another round of one-time payments, changing tax rules to help the unemployed, and paying out a new child tax break.

Many Americans who did not receive the correct stimulus payments in January or last year are now applying for extra money. And some low-income filers are now eligible for more tax credits than usual. The IRS has to manually review many of these returns, a slow process that delays refunds for millions of low-income families after the agency faced a decade worth of budget cuts and staff losses.

More than 100 people still waiting for the IRS to process their returns shared their stories with the Washington Post. Most were filed electronically on February 12, when the IRS opened tax filing season. They were eager to get their refunds and update their information with the IRS before they ran out of $ 1,400 in stimulus payments. But a month later, many of these early applicants are still waiting for their returns to be processed and their refunds on deposit.

“I’m supposed to get a $ 5,600 refund. I need that money badly and the IRS just isn’t giving me any answers, ”said Frances Johnson, a single mother in Burlington, Washington, who filed an application on Feb.12 and needs the money to fix her car. “When I call they say I have to wait until the end of April.”

The two main problems that have cropped up so far this tax return season are large numbers of returns being sent for manual review and the popular “Where’s My Refund?” Malfunctioning. Tool for weeks. The tool was fixed last weekend, the IRS confirmed, but processing delays remain.

The national taxpayer’s attorney, Erin Collins, has urged the IRS to let people know why the return is delayed. She is also concerned that processing delays could worsen if millions of people who have already filed their taxes have to file amended tax returns to benefit from the changes that Congress has just passed.

For example, unemployed workers could get tax breaks because Congress agreed to make non-taxable the first $ 10,200 in unemployment benefits the government received in 2020.

The backlog is severe for tax returns that require manual review by an experienced IRS agent. Changed returns typically require manual verification, and many of the 6.7 million returns that remain to be processed are also up for manual verification, according to Collins.

The IRS said it has received 36 million refunds to date and that the agency is moving as quickly as possible to receive stimulus payments in the coming days while processing more returns.

“While the IRS issues most tax refunds within 21 days of the start of the filing season, it is possible that some refunds take longer,” said IRS spokesman Robert Marvin. “Many factors can affect the timing of your refund after we receive your return. Some tax returns take longer than others. For example, returns with an error, incomplete information, or those affected by theft or fraud may take longer to process. “

Marvin said the IRS would send taxpayer letters if more information was needed to process a return.

Jacob White is one of those frustrated Americans who desperately wants a refund so he can pay the March rent. He and his girlfriend filed their tax return the same day: February 12th. Your refund arrived two weeks later. He did not see his and the IRS reports that it is still being “processed”.

An IRS call center agent told White on Wednesday that “over 7 million returns have been sent to the troubleshooting system to buy time”.

“It’s just the wrong time for all of this. People need the money,” White said. “My rent and car payment are due next week, and so is the electricity.”

The troubleshooting system is the group that is involved in manually reviewing returns. For most years, these are mostly returns that are flagged as potentially fraudulent. That year, however, millions of returns claiming incentive funds or related to the Earned Income Tax Credit or the Child Tax Credit also went to the Errors Department. Most of these applicants are low-income families who lost a job or had a new baby in 2020 and should have received stimulus checks based on these events but did not.

“We had a baby for 2020 and we also had a drop in our income in 2020 so we claimed we had missed some incentives,” said Caitlyn Primiano, who lives in Syracuse, NY with her husband and five children. “The IRS is telling everyone like me that your returns are in the Review and Errors department and should take 10 weeks to complete.”

The other problem is that Congress said low-income tax advisors could use either 2019 or 2020 income to qualify for the highest possible child tax credits. IRS systems have struggled to tackle two different years of income qualification.

Current and former IRS staff say it is inevitable that something will go wrong as there are not enough staff to handle the workload, especially as Congress adds more responsibilities.

The IRS budget was cut 20 percent from 2010 to 2019, and the workforce fell 23 percent – or more than 22,000 jobs, according to the Government Accountability Office.

“At some point, when you take that much money away from an agency, they do less with less, and it shows across the IRS – from the time it takes to process a return to the number of calls they make for one lower enforcement can answer. Said Chye-Ching Huang, executive director of the Tax Law Center at New York University School of Law.

The IRS “has moved from being a pure tax administration system to an implementation of social programs,” Collins said in an interview. “The IRS will do it, but at what cost?”

Collins said the ramifications for the country’s tax investigators are slower processing of tax returns and less assistance from tax assistants as fewer staff are available to take calls and review tax returns. Most IRS employees are already doing mandatory overtime, she noted. While the American bailout plan provides approximately $ 1.9 billion of additional funding for the IRS, it takes time to hire and train employees to work with sensitive data.

The growing backlog with the IRS – and the ongoing stresses from the coronavirus – has led some Democratic lawmakers to urge the agency to extend the filing period beyond April 15, as it did last year.

Rep. Bill Pascrell Jr. (DN.J.) even officially asked the IRS in a letter last week to postpone the deadline for filing taxes to October. But the lawmaker, who chairs a supervisory board of the House Ways and Means Committee, said he hadn’t heard of it Friday and was setting the stage for a tense legislature-agency conflict when IRS Commissioner Charles Rettig testified at a hearing next week .

“If they don’t answer me by then, I don’t think it’s going to be a nice discussion,” said Pascrell, adding that the agency generally “needs to do a better job.”

Senator Ron Wyden (D-Ore.), Chairman of the Senate Finance Committee, pledged that his panel would closely monitor the IRS as it implements the new stimulus bill, beginning with an expected hearing with Rettig in early April.

According to Wyden, lawmakers are demanding a “specific work plan” from the agency as it begins a process to implement major changes to tax legislation that would provide new help to unemployed workers and families with children.

“We’re making this clear to the IRS, we want this to happen as soon as possible,” he said.

Yet millions of Americans are still waiting for their refund.

“It’s just so frustrating,” said Jason Weiler, who works in the Los Angeles film industry and was counting on cash back and the latest incentives to fill a hole when his last appearance ends soon. “The IRS asked us to bring this in, but what do we have to show?”