By Laura Saunders
It's May. Do you know where your tax refund is?
Dan Schoenherr doesn't. In February, Mr. Schoenherr, a 72-year
old retired credit-union executive living in Westfield, Ind.,
prepared and filed his return online, claiming a refund of about
$8,000. On Feb. 16, he got a notice saying the Internal Revenue
Service had accepted his return.
Since then, nothing.
When he checks the IRS's Where's My Refund? tool, it says, "We
cannot provide any information about your refund." His phone calls
to the agency have been rejected due to high volume. In April, he
spoke with his online preparer but it said he had to contact the
IRS. Also in April, he sought aid from his Congress member and
filled out a form allowing staff to ask the IRS about his
"It's crazy. I've been e-filing for more than 10 years and never
had this trouble," says Mr. Schoenherr.
Mr. Schoenherr is far from alone. This year a host of problems
rooted in the Covid-19 pandemic have led to unprecedented
customer-service problems at the IRS. They include delayed
processing -- and refunds -- for millions of 2019 and 2020 returns,
a frustrating inability to reach the IRS by phone, and 260,000
notices saying taxpayers failed to file 2019 returns when they
likely had, among other things.
Tax professionals, who have a dedicated phone line to the
agency, are also frustrated. "Even with a special line, it's hard
to get the IRS on the phone and it's taking months to resolve
issues that should take weeks," says Jan Lewis, a CPA with Haddox
Reid in Jackson, Miss. Her firm prepares some 2,500 returns a year,
about two-thirds of them for individuals.
For its part, the IRS has had to do more with less, including
15% fewer employees in 2020 than in 2010. Since the beginning of
the pandemic, the agency has had to delay two annual filing
deadlines; coordinate a total of 470 million stimulus payments to
individuals, many of whom weren't in its system; and apply tax-law
changes for 2020 that Congress enacted in March, 2021, after
millions of filers had already submitted returns. That's in
addition to common staffing and logistical challenges faced by many
large organizations since the start of last year.
In some cases, paper returns and envelopes containing checks
piled up in trailers for want of people to process them, and the
IRS has had to move them around to offices with available
"This has been a challenging year," IRS Commissioner Chuck
Rettig said in testimony before Congress in April. "We greatly
appreciate the patience and understanding of others." He noted that
the IRS's call volume has more than doubled, to more than 1,500
calls per second at times.
Now the IRS is reviewing about 16 million 2020 returns, mostly
because of tax changes last year and in March. It must also sort
through returns to issue refunds on some 2020 unemployment
payments. And it must gear up to send checks to millions of
families as upfront payments of child tax credits for 2021
beginning this summer.
That's a lot -- but it does little to lessen the frustration of
taxpayers like Mr. Schoenherr who can't communicate with the
What will resolve this mess?
This year, maybe only time and patience. For now, here's more
information for frustrated taxpayers.
Don't call the IRS, in most cases
According to data from the National Taxpayer Advocate, only
about two of every 100 phone calls to (800) 829-1040 are getting
through. Even then, the staffer often won't be able to answer the
question, especially if it's about a refund. So calling the IRS is
likely to be a waste of effort.
There's a key exception to this advice for taxpayers who get a
notice from the IRS asserting taxes due or requesting specific
information. These letters usually give a number to call that's
different from the main 800 number, and the chances of getting
through are far higher -- especially for calls made early or late
in the day and not on Monday, according to an IRS spokesman.
Don't ignore these letters (see below), and a good place to
start is on the phone.
Understand tax-refund delays
Recently the IRS was still processing about 1.3 million
individual returns filed last year, many of them on paper. (Not all
of these filers were Luddites; the IRS e-file system can't handle
certain forms or documents.) These have to be keyed in by
individuals, and the IRS is moving returns to different offices to
get through the backlog.
The agency is also holding about 16 million individual returns
filed in 2021 -- and refunds due on them. It must review each one
to make sure filers correctly claimed recovery rebate credits if
they got (or didn't get) stimulus payments. It must also
double-check child tax credits and earned-income tax credits for
This month the IRS will also begin issuing refunds to filers
eligible for an exemption of up to $10,200 per recipient of 2020
unemployment pay that Congress enacted in March after many people
had already filed returns. According to a spokesman, the process
will begin with simpler returns before proceeding to more complex
ones, such as for married couples. It's expected to take several
months to complete.
To find out about your refund, use the IRS's " Where's My
Refund?" tool. If it has no information, check again in a week or
Handle IRS notice letters with care
These typically say the filer owes more money to the IRS or
request more information. In early February, the agency sent
260,000 such notices erroneously saying the taxpayers hadn't filed
2019 returns when they had. On Feb. 18, it issued a statement that
recipients should disregard these letters.
Except in this case, do not ignore these notices even if they
seem incorrect. Instead, practice the tax equivalent of "defensive
driving." Call to discuss the issue if a special phone number is
given, and make notes of the date and content of the conversation,
including the IRS staffer's name. Write the agency if requested,
and respond to future letters even if that means sending a copy of
a letter you have already sent.
Always send correspondence to the IRS via certified mail, and
don't lose the receipts.
But don't feel you must pay an erroneous notice. Ms. Lewis says
some of her clients have been so fearful they've paid the IRS
without telling her in order to stop threatening letters. That has
complicated her efforts to fix their problems.
Know that advocates are trying to help
National Taxpayer Advocate Erin Collins has called for the IRS
to communicate better with taxpayers so they aren't in the dark.
For example, she says the agency should release more timely
information about the reasons for refund delays.
Ms. Collins heads the Taxpayer Advocate Service, an independent,
effective unit within the IRS that aids taxpayers, often when they
are facing dire economic circumstances (such as eviction) or are
tangled up in red tape over a long period. This year TAS is
hampered in its ability to help because many filed returns haven't
yet been entered in the IRS's system.
The American Institute of CPAs also has a list of
recommendations for the IRS, such as pausing the agency's
collections process for 90 days after May 17 to let the system
reset. So far the agency hasn't responded to the proposals.
At least there will be interest on late refunds
For most tax refunds issued after April 15, the IRS will pay
interest as long as the return was filed by May 17. How this works
is complex, but interest will apply starting a few days after April
15. The current interest rate comes to about 3% annually, and the
IRS plans to include interest payments with refunds.
The interest payments are taxable income on your 2021
Write to Laura Saunders at email@example.com
(END) Dow Jones Newswires
May 07, 2021 05:45 ET (09:45 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.