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Still waiting for a refund? It would take six to nine months for certain taxpayers to see a check

If you've already decided how to spend your tax refund, you'd better have a contingency plan, especially if you were hoping to use that money to pay down debt or purchase essential goods and services.

The Taxpayer Advocate Service (TAS) warned on Thursday that certain taxpayers may not see their refunds for another six months. Yes, you read that right, see you in about six months.

Refund checks will take about six months to arrive for taxpayers who filed their taxes on paper, something that would also affect those who filed an amendment before receiving their refund and those who made mistakes reconciling Child Tax Credit payments, That's according to testimony from national taxpayer advocate Erin Collins during a House subcommittee hearing on Thursday.

If you are part of this group of taxpayers, you could see your money in October or even until the end of the year.

The Taxpayer Advocate Service, the IRS watchdog, has been sounding the alarm for months about tax agency processing delays.

“In her live testimony on the current state of IRS operations, National Taxpayer Advocate Erin M. Collins says, “I applaud the IRS saying they will catch up in December, but for the millions of taxpayers waiting that is unacceptable," CAS tweeted on Thursday.

Budget cuts and factors associated with the COVID-19 pandemic have contributed to the IRS staffing to less than 80,000 people, the same level it was nearly half a century ago.

In a report to Congress, the IRS acknowledged that only about 20% of callers got through to agents this month, though that's actually an improvement over 2021, when only 11% of calls were answered.

Collins warned that it could realistically take six to nine months to get a refund if you file your 2021 federal income tax return on paper.

However, not all returns filed electronically will result in prompt refunds. Many taxpayers who filed online will face delays if they made mistakes, such as claiming more money for the recovery refund credit when IRS records show they already received what they're owed. The IRS intensified the revision of the numbers in search of inconsistencies.

The IRS has already warned taxpayers that it can take more than 21 days to receive a refund, even if the return is filed electronically and is error-free.

The treasury received 103.3 million declarations until April 8. That was 2.4% more than in the same period a year ago, according to the latest filing statistics.

Nearly 75% of the returns the IRS expected to process were filed by April 8. The IRS processed nearly 99.8 million returns, 9.5% more than a year ago.

More than 70 million refunds were issued through April 8. The average refund was $3,175, up 9.9% from a year ago.

"Paper forms remain at the heart of the agency's challenges," Collins said at the House government operations subcommittee hearing on Thursday. The advocate noted that IRS employees sift through paper forms, but first they have to deal with the backlog of unprocessed 2020 returns.

Collins referred to paper returns as the IRS's "kryptonite."

The IRS has struggled to deal with additional duties related to the pandemic, such as administering stimulus checks and child tax credit prepayments in the past year, in addition to chronic underfunding and staffing. That has led to an unprecedented backlog of unprocessed tax returns. Collins estimated that, as of the end of December, the IRS had a backlog of 6 million unprocessed original individual returns and 2.3 million unprocessed amended returns.

At the hearing on April 21, IRS Commissioner Chuck Rettig estimated that the agency still had to work through 2.4 million paper returns filed in calendar year 2021. Rettig reiterated that the agency needs more funding to carry out all the functions assigned to it.

“A significantly higher error rate last year triggered more delays and paperwork as millions of taxpayers who received stimulus payments in 2020 wrongly claimed they were owed more money through the recovery refund credit on 2020 returns. Rettig told the Senate Finance Committee on April 7.

Treasury officials said this week that the agency may be reaching a breaking point. "Today's deadline is a turning point in what has been the agency's most challenging filing season in recent memory," he wrote.

Those funding problems and the resulting backlog have implications beyond a simple pile of paper. Some taxpayers have been waiting months for refunds.

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