The Internal Revenue Service will begin processing 2021 tax returns this week, but officials warn of significant delays on the horizon. The government agency is currently plagued with problems, all of which will likely contribute to a delay in processing returns.
A worker shortage, an uptick in pandemic-related paperwork, and a lack of funding all signal big issues for the 2022 tax season, according to experts.
“The IRS right now has unacceptable backlogs and the customer service that people are receiving is not what the American public deserves,” White House press secretary Jen Psaki said Friday. “The agency has not been equipped with the resources to adequately serve taxpayers in normal times, let alone during a pandemic.”
Unsurprisingly, Psaki said the issues predate the Biden administration. She also urged understanding for the beleaguered government workers.
“It’s going to take some work, it’s going to take some time, and I think people need to understand that they need funding,” Psaki said.
IRS Commissioner Chuck Rettig warned of similar issues earlier in the month. “In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs,” he said candidly.
Why the IRS Faces Delays in Processing Returns
One of the primary reasons for delays is that IRS agents are still working through 2020 returns. The government issued hundreds of billions of dollars in stimulus payments and tax credits. Many recipients did not account for them properly on their returns. The IRS has had to track down many faulty returns to mitigate the damage. The IRS estimates that nearly 60 million people either called or visited the revenue office in the past year, too.
Donald Williamson, a professor at American University in Washington specializing in tax accounting, said he expects “weeks and weeks” of IRS delays in 2022. “You can blame Congress or the IRS. I imagine they’re trying to do the right thing but it just adds to further complexity,” he said. “My advice in 2022 is file early, get started tomorrow and try to put your taxes together with a qualified professional.”
Right now, paper returns with amendments cause the majority of the delays. File electronically if you can, urges the IRS, especially if your taxes are relatively simple in nature.
Despite the bleak outlook, the IRS estimates that most Americans will receive their returns within three weeks of filing.
So why can’t the government hire enough staff to keep up with demand? Tony Reardon, president of the National Treasury Employees Union that represents IRS workers, said the agency doesn’t pay well. The IRS “has a hard time recruiting because they’re up against Burger King or McDonald’s,” he said. Minimum wage employees don’t want to “deal with confusing rules and regulations.”
As a reminder, taxpayers only receive a refund when they overpay during the previous fiscal year. The government is not giving out any free money; you simply loaned them more than they required, and they are now repaying the loan without any interest. A smaller refund just means you kept more of your own money during the previous calendar year. You can always adjust your withholding by talking to your company’s HR representative.