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Why Are Federal Tax Refunds Delayed? And What Can You Do About It?

MINNEAPOLIS (WCCO) — We’re two months since the deadline for filing taxes and still millions of Americans are waiting on their money. Even people who filed six months ago.

It’s led to one of the most popular emails we receive each week. Why are federal tax refunds delayed? And what can those waiting do about it? Good Question. Our Jeff Wagner learned the answer is not what people want to hear.

When Tom Petty wrote a famous tune in which he says, “The waiting is the hardest part,” he likely wasn’t talking about tax refunds.

“We got our state refund on May 5 and we’re still waiting for federal [refund],” said Cris Ruettiman.

Same goes for Mike Laas who filed in early February, making his wait now surpass six months.

“We usually got it within eight weeks, six to eight weeks if not sooner,” he said.

The stress from taxpayers is being heaped on accountants like Dominic Nzara, who owns Dominic’s Tax Service in Crystal.

“I’m really, really frustrated as a business owner,” Nzara said. “It got to a point where by I had to contact an attorney to handle one of my clients who thought that we stole their money.”

In late June, the Taxpayer Advocate Service, an independent organization within the IRS, said the IRS had a backlog of more than 35 million individual and business income tax returns that required manual processing. That means an employee needs to get involved to move it along. Nearly 17 million of those returns were waiting to be processed, while nearly 16 million were suspended during processing and needed further review.

As of July 17, the IRS stated there were still 15.6 million unprocessed individual returns.

“People would understand a reasonable amount of delay, but when it goes to months and months, and no information from the IRS, they start thinking that we did something wrong as a small business owner,” said Nzara.

What’s leading to this backlog?

“I would say primarily it’s the COVID situation,” said M.P. Singh, CPA and partner at Prudent Accountants in Minneapolis.

He said the issues with the IRS started last year when the pandemic hit during the 2020 filing season.

“It took more than 90 days to simply put in the systems in place so [IRS staff] could work remotely,” he said.

IRS staff that typically worked on tax returns then had to focus on the three rounds of stimulus payments.

Their other tasks this season included handling millions of refunds for earned income tax credits and the new Child Tax Credit.

“It’s unprecedented. We have not seen this before,” said Singh.

What’s the most frustrating part of waiting?

“We went ahead and paid for some things thinking we were gonna get it and we’d like to pay it off,” said Ruettiman.

“If I owed [the IRS] the money, I’d be paying penalties and interest and all kinds of other crap on it,” added Laas.

So what can those still waiting do? You can check your refund’s status on the IRS’s “Where’s My Refund” webpage.

You can also call the IRS, but Laas has been down that road before.

“You just get a recording to ask you to enter the same stuff you do on ‘Where’s My [Refund],’” he said.

Both accountants still suggest trying to call the IRS if you’re hoping to speak with someone about your refund. Some of Nzara’s clients had better luck getting through in the early morning or evening hours. The number is 1-800-829-1040.


Source: CBS Minnesota

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