If you already have plans to spend your tax refund, you'd better take a breather and prepare to wait longer than expected, as the IRS has admitted that it needs more workers amid mountains of unprocessed returns.
In early March, the agency said it was taking an "all hands on deck" approach to hiring 10,000 new workers and combating its growing challenges as the 2022 tax season nears the deadline, the April 18th.
But the tax agency has had trouble hiring, as other companies with growing staffing needs are offering slightly higher wages, even though the IRS pays a minimum of $15.61 an hour, according to their job postings.
The Wall Street Journal reported that the agency is also competing with attractive perks like support for tuition costs and child care programs offered by McDonald's, another company grappling with staffing shortages.
But understaffing is not a new problem for the tax agency: A report from the Tax Administration Inspector General indicated that, as of August 2021, the IRS had only reached 67% of its staffing goal: adding 3,660 workers in 2021 when he aspired to hire at least 5,473.
Some of the problems the agency faced in hiring included its pay for "low-grade management positions" such as mail clerks, according to the report.
“These employees can find similar entry-level positions in private industry for higher wages,” the Inspector General wrote.
But compared to big companies raising wages, the IRS faces some unique problems. Its outdated technology also makes it difficult to compete with companies offering remote work, as Rubin reports.
It also faces a budget that has shrunk 23% since 2010, according to the Tax Policy Center.
Meanwhile, the agency's workload has increased by 19% since then, according to National Taxpayer Advocate Erin Collins, who tracks workload by the number of individual returns filed.
STAFF SHORTAGES INCREASE TAX RETURN PROCESSING TIMES
But while staffing shortages at companies like McDonald's would result in longer waits in line at the counter, IRS understaffing and funding has led to millions of tax refunds remaining unprocessed. This means that some taxpayers have been waiting more than nine months for the agency to process their tax returns.
Tax returns are piling up at the IRS and millions of taxpayers are experiencing refund delays beyond the typical 21 days or less for e-filed returns that elect a direct deposit refund.
The IRS even issued a press release to warn taxpayers not to rely on getting a refund by a certain date, especially if they plan to spend that money on essential purchases or paying bills.
In its operations page update over the weekend, the IRS posted that as of March 25 it had 7.2 million unprocessed individual returns, including 4.9 million with errors or in need of special handling (paper returns, for example).
Both numbers are up from last week by 200,000, suggesting more returns are going into the raw returns pile as the tax season deadline approaches.
The good news is that the latest tax filing statistics as of March 25 show that the IRS processed nearly 79 million individual tax returns and issued nearly 58 million refunds, averaging $3,263. So most of the returns are going smoothly.
The problem lies for those who made calculation errors or chose to file their taxes through printed forms, as these forms will require human intervention, therefore, a wait of weeks or even months.
If you file an accurate return and request a direct deposit refund, you'll likely get the money within 21 days.
"SORRY, BUT THE PROCESSING OF YOUR RETURN HAS BEEN DELAYED BEYOND THE NORMAL DELAY"
You'll need to enter your Social Security number, filing status, and expected refund amount. You'll see a "refund status results" bar as your return progresses through the process. You will be able to see the messages return received, refund approved, refund sent.
The fact that you read "Refund Received" on the screen means that the IRS found no errors on your return and will soon move to "Refund Approved."
But the message: "Sorry, but the processing of your return was delayed beyond the normal time" means that a manual review by the IRS may be necessary when a return has errors, is incomplete, or is affected by identity theft or fraud.
For many taxpayers, the message is associated with calculation errors when reconciling economic stimulus payments and/or Child Tax Credit advance payments.
Taxpayers who see the unwelcome message on their screens have no choice but to wait for the IRS to do a manual review. In some cases, the IRS could take 90 to 120 days (13 to 17 weeks) to complete the process.
Additionally, it takes more than 20 weeks to process amended returns.
Currently, the 4.9 million returns that are on hold also include prior year returns, so some taxpayers are still waiting for their tax year 2020 refunds.