Some taxpayers could face ‘lengthy delays’ getting refunds

If you filed a paper return this year, your refund might be delayed.

According to a report by Erin Collins, a national taxpayer advocate, those filing paper returns — as opposed to the majority of people who file electronic returns — “may be in for a long wait” for their refund.

“Taxpayers who filed a 2019 paper return and are entitled to refunds may be in for a long wait. The IRS had to suspend the processing of paper tax returns, and as of May 16, it estimated it had a backlog of 4.7 million paper returns. Although the IRS is reopening some of its core operations, it is not clear when it can open and log all the returns sitting in mail facilities,” according to the report authored by Collins.

One other reason for the delay cited in the report was that some taxpayers returns were mistakenly flagged by IRS processing filters.

“Some taxpayers whose returns were mistakenly flagged by IRS processing filters are experiencing lengthy delays in receiving their refunds. Refund delays can have a significant financial impact on low-income taxpayers, as refunds often constitute a significant percentage of their annual household incomes. Notably, some of the refund delays have been generated by claims for the Earned Income Tax Credit (EITC) or additional Child Tax Credit (CTC),” according to the report.

The Taxpayer Advocate Service, an independent organization within the IRS that helps taxpayers and protects taxpayer rights, is working with the IRS to refine its screening filters so fewer legitimate returns are flagged as potentially fraudulent.

Following the impact of the global pandemic, the IRS temporarily shut down some of its phone services, Taxpayer Assistance Centers and mail facilities. That closure has not only created a backlog of paper returns, but taxpayers have also had a difficult time getting help from the IRS.

According to The Associated Press, the IRS is still processing and issuing refunds, most within 21 days,

Those getting refunds will be paid interest, dating back to April 15, if they file on time. The interest rate is 5% per year through June 30. Starting July 1, it drops to 3% per year. The interest is compounded daily for refunds. Any refund issued after July 1 will get a blended rate.

The Associated Press contributed to this story.

Cox Media Group