Reason the IRS might not be responsive to Tax Refund

Americans are stressed through tough times. Tens of millions of people are out of work and counting on getting money from whatever means they can. Between prolonged unemployment benefits, and other assistance programs, most people simply can’t afford to wait for cash that’s coming to them.

Around this time each year, so many taxpayers hope to get their tax refund back from the Internal Revenue Service in a timely manner. The fact that this year’s tax deadline got pushed back to July 15 has led to some people putting off filing their returns, even though it means that they won’t get their refunds until later. Yet many of those who have filed haven’t gotten tax refunds yet, and because of the reason behind the delay, they’re probable to have to wait quite a while. The cause hasn’t gotten a lot of publicity, but it affects millions of people — and could be the reason you’re still waiting for your money back from the IRS.

Hidden in the details

The IRS regularly tells taxpayers that it prefers to receive tax returns through electronic filing. Adoption of e-filing has been quite high in recent years, with about seven out of every eight tax returns in 2019 getting electronically transmitted to the IRS.

That’s why an April 9 release from the IRS didn’t seem like anything out of the ordinary. It began as many comparable messages have in the past, telling taxpayers and tax professionals to use electronic options where possible. In addition to the usual explanations of speeding up the process of tax returns and refund payments, the IRS also noted that e-filing supports efforts toward social distancing during the coronavirus pandemic.

Nowhere in the April 9 release did the IRS say anything about not sending refunds out to taxpayers. Instead, you have to read between the lines to comprehend the current situation.

Paper return processing is on hold

The IRS is currently not able to process individual paper tax returns. If you already have filed via paper but it has not yet been processed, do not file a second tax return or write to the IRS to inquire about the status of your return or your economic impact payment. Paper returns will be processed once processing centers are able to reopen.

Even here, the IRS doesn’t connect the dots and explicitly say anything about refund checks. However, once you think about it, the message is obvious: If the IRS can’t process paper tax returns, then it can’t process the refunds that those paper tax returns contain.

What you can do if you haven’t filed yet

For those taxpayers who’ve already filed paper returns and are hoping for refunds, there’s little you can do. The IRS explicitly says not to file a second return, as it could cause problems down the road once your paper return does get processed.

However, if you haven’t yet filed your tax return and you need that refund quickly, electronic filing is your only reasonable option. The IRS isn’t giving any guidance on when you can expect paper tax return processing to resume, and it’s clear that doing so isn’t a high priority for the tax service. E-filing takes you out of that uncertain situation and should help speed up your refund.

Electronic filing is also essential if you’re counting on getting a stimulus check based on your 2019 income. If you use a paper return and it doesn’t get processed in timely fashion, then you might not get a check at all — and if your 2020 taxes take you over key income thresholds, you might not ever get the benefit of the stimulus payments.

So many people find electronic filing inconvenient, costly, or just not as desirable as filing a paper return. But if you’re counting on getting money from the IRS, there’s simply no alternative this year. It’s unfortunate that the IRS wasn’t able to get that message out more effectively before it was too late for millions of paper return-filing taxpayers.

COVID-19 hits your tax refund

Every year, tax professionals urge people who are due refunds to file early and electronically, early to make it more difficult for tax scammers to try to hijack your refund, and electronically to pace up the process of transferring money from the Treasury to your bank account.

Now there’s another reason that nobody, but nobody, saw coming: The COVID-19 pandemic that for most of us came out of nowhere in just a matter of weeks smacked the planet. People, smart people anyway, no longer hug or shake hands. Most wear masks especially when visiting places like the Mayo Clinic. The virus has shut down everything from Broadway plays and baseball to your kids’ school and your favorite sit-down eating place. Millions of people who normally commute to the office five days per week are now furloughed, fired or working from home.

That consists of many federal operations, among them the Internal Revenue Service which, you well know, processes tax returns — some quicker than others. This reader, like many people, could surely use his tax refund during these uncertain times. He writes:

“My wife and I submitted our 2019 federal taxes as married filing jointly. We have always mailed our returns and have no problem with the extended time it takes to receive our refund. Our returns were mailed on Feb. 24, 2020. In the past we normally received our refund within four to six weeks and I relied on the IRS website to track the status of our return.

“It’s now been over eight weeks and the IRS site doesn’t show it has even received it. So we asked a friend of ours, who is an IRS employee, if there is something we could do or a contact. He simply told us that it would take a ‘long’ time. Because of COVID-19, most of the employees were sent home to work. However, they were not provided with the equipment (computers, etc.) to do anything. The mail-in Tax returns are just sitting in the office waiting to be processed when the workers return. He described it as being on a paid lay off. Oh yeah, he also said ‘Good luck!’ I’m sure this will not help us receive our stimulus check in an appropriate manner either.