The IRS still has millions of individual tax returns in the “processing pipeline” from last year.
The Washington Post reported the agency received about 16 million paper individual returns last year. But as of Dec. 25, it was still processing 6.9 million of them.
The IRS said it is sending tax returns and taxpayer correspondence to locations where more staffing is available
“For refunds that could not be issued in 2020 because the tax return is being corrected, reviewed or awaiting correspondence from a taxpayer, the refund will be issued as a paper check in 2021 per our normal processes,” the IRS said in an operations update. “Taxpayers are encouraged to continue to check ‘Where’s My Refund’ for their personalized refund status.”
Meanwhile, the Post noted some people are in a panic because they haven’t received their first or second stimulus payment because their 2019 federal returns haven’t been processed.
And paper-return backlogs are likely to grow even more this year.
Anyone who can e-file should do so, said National Taxpayer Advocate Erin Collins.
“There’s the added challenge that the last filing season had to deal with because of COVID,” Collins said. “And in my opinion, I think it’s going to overlap into the next filing season.”
At one point last year, the number of tax refunds issued was down almost 5% compared to the previous year, an indication that many Americans didn’t withhold enough from their paychecks and could face bills from the IRS.