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As reported by numerous media outlets (The Hill, NPR, The Washington Post, CBS News, The New York Times), the IRS backlog is staggering. This is of course not good news at the start of the tax filing season, but it also means previous years’ returns that have been back logged for months may also continue to get pushed further on the calendar as well.

The statistic repeated in several of these news reports is nearly 24 million individual and business tax returns requiring at least one action have yet to be processed by the IRS. Here is how The Washington Post broke down that total: “As of Jan. 28, the tally of outstanding individual and business returns requiring what the IRS calls “manual processing” — an operation where an employee must take at least one action rather than relying on an automated system to move the case — came to 23.7 million, the taxpayer advocate data shows. The number includes 9.7 million paper returns awaiting processing; 4.1 million that were suspended because of errors with stimulus payments, pandemic relief or other issues; 4.1 million amended returns; and 5.8 million pieces of correspondence awaiting action between the agency and taxpayers to resolve issues before the returns are completed.”

The IRS points to staffing shortage among several other issues at fault for the backlog. One example from The New York Times, “Treasury officials noted that in the first half of 2021, fewer than 15,000 employees were available to handle more than 240 million calls — one person for every 16,000 calls.”

What does all this mean for taxpayers?

Patience is a virtue as they say. Electronically filed returns will likely be processed the quickest but expect refunds to take longer again this year. And if you paper file or there are errors on your return don’t count on those refunds any time soon. One article indicated the IRS is taking at least 10 months to process paper-filed returns for the 2020 tax year.

Contact us

If you have general questions about the information outlined above, do not hesitate to contact us. Please note, unfortunately, we are unable to provide estimated timing on receiving refunds or responses from the IRS. For additional information call us at 630.954.1400 or click here to contact us. We look forward to speaking with you soon.

Daniel DiMario

Dan DiMario's practice covers the preparation and review of business, fiduciary and individual tax returns, including returns for family offices and high-net-worth individuals. He regularly communicates with clients on changes in federal, state and local income tax laws and compliance issues, and details how these changes will impact clients’ income tax liability.