IRS chief warns of tax refund delays due to worker shortages, return backlogs
The IRS has issued 63M refunds so far this year
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The 2022 tax season is swiftly coming to an end, but IRS Commissioner Chuck Rettig warned on Thursday that many taxpayers could see delays in their refunds as the agency confronts a worker shortage and severe backlog of unprocessed returns.
While testifying before the Senate Finance Committee, Rettig acknowledged that continuing fallout from the COVID-19 pandemic – and the many tax changes included in federal relief measures – is likely to delay tax refunds for some filers this year.
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"The IRS is serving more people and entities in a global environment than ever before while handling new and bigger responsibilities," Rettig said. "At the same time, we have experienced delays in updating our IT systems, which means the IRS and taxpayers must continue to use certain paper-based processes."
Although the IRS planned a hiring spree this tax season to process 20 million returns from previous years, the agency has so far onboarded just 2,000 of the 10,000 new workers it intended to hire.
There are roughly 2.7 million paper returns from 2021 and 2.3 million returns from 2022 that have not yet been processed. By comparison, the IRS usually enters the tax-filing season with fewer than 1 million remaining items to address. Still, Rettig noted the IRS had cleared about 90% of the "error resolution" backlog.
Internal Revenue Service (IRS) Commissioner Charles Rettig testifies during a Senate Finance Committee hearing June 8, 2021 on Capitol Hill in Washington, D.C. (Photo by Tom Williams-Pool/Getty Images / Getty Images)
"We're trending in the right direction," he said.
As of April 1, the tax-collecting agency has processed more than 89 million returns and issued more than 63 million refunds worth a collective $204 billion. The average payment so far is worth $3,352 – much larger than last year's average of about $2,800 – though it may change by the April 18 deadline.
There are fresh challenges facing the IRS this year: Taxpayers will have to reflect the monthly child tax credit payments and the stimulus checks they received in 2021 on their returns, further complicating matters and increasing the likelihood of errors and delays in processing returns.
Rettig has also previously noted that the agency is grossly understaffed; before the hiring spree, it had 20,000 fewer staff than it did in 2010, and its budget is roughly $11.4 billion – 20% less than it was in 2010, when adjusted for inflation, according to the Congressional Budget Office.
The Internal Revenue Service (IRS) headquarters in Washington, D.C., U.S., on Friday, Feb. 25, 2022. (Photographer: Al Drago/Bloomberg via Getty Images / Getty Images)
On top of that, more than 20% of the IRS customer service workforce has been unable to work for pandemic-related health reasons over the last two years.
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If taxpayers file an electronic return with no issues and opt to receive the refund via direct deposit, the IRS anticipates the money will arrive within 21 days. You can start tracking the status of your tax refund within 24 hours of filing using the IRS' Where’s My Refund tool.
The tax-filing season will end on April 18 this year for most individuals, rather than the usual deadline of April 15, because that's when Emancipation Day will be observed in Washington, D.C.