In light of recent findings, it has come to light that the IRS is currently grappling with a significant backlog of unprocessed tax returns. As of May 13, 2023, a staggering 4.2 million individual tax returns remain unresolved within the IRS system. Among these, 2 million returns necessitate error correction or specialized handling, while the remaining 2.2 million consist of paper returns awaiting thorough review and subsequent processing.
The Internal Revenue Service IRS has implemented a system where it gives priority to processing individual tax returns that are eligible for refunds. This means that returns indicating refunds are due receive prompt attention and processing. Conversely, tax returns indicating tax owed are processed at a later stage. In cases where a payment is mailed alongside the tax return, the IRS ensures efficient handling by separating the payment upon receipt and promptly crediting the taxpayer’s account with the payment amount.
Priority Given to Processing Refund-Eligible Returns
Additionally, the IRS continues to diligently process tax returns that require manual review due to errors. These returns are reviewed and addressed in the order they are received, ensuring a fair and systematic approach to resolving any issues. Extended Processing Time for Paper Returns with Errors or Suspected Fraud: 120+ Days Expected
Regardless of whether a tax return is filed electronically or on paper, it may encounter delays during processing if it contains errors, lacks crucial information, or raises suspicions of identity theft or fraud.
If the IRS identifies an issue that can be resolved without contacting the taxpayer, it will proceed with rectifying the error internally. However, if additional information is required or if the taxpayer needs to verify the submission of their tax return, the IRS will send a letter requesting the necessary action.
Resolving these matters can take longer than 120 days, depending on the taxpayer’s promptness and accuracy in responding to the IRS, as well as the IRS’s own processing timeline. Taxpayers are strongly encouraged to regularly refer to the IRS’s frequently asked questions regarding tax season refunds to stay informed and updated.
Taxpayer Action Unnecessary Unless Prompted by the IRS
In the majority of cases, taxpayers need not take any further action. The IRS will reach out to them via mail if additional information is needed or if adjustments were made to their tax return. For those who filed electronically and received an acknowledgment, there is typically no need for additional steps except promptly responding to any information requests from the IRS.
However, if a taxpayer is entitled to a refund, filed their return on paper over six months ago, and the “Where’s My Refund?” tool does not indicate that the IRS has received their return, it is advisable to resubmit the tax return, preferably electronically. It is crucial to include the original signature and all accompanying documents as submitted with the original return.
In all other situations, the IRS advises against submitting another tax return. Instead, taxpayers are encouraged to check the “Where’s My Refund?” tool or access their Online Account for potential updates or changes.
Amending Tax Returns with Form 1040-X: Correcting Errors and Making Changes
As of May 13, 2023, the IRS is contending with a backlog of 1.43 million unprocessed amended tax returns filed on Form 1040-X. These returns are being handled in the sequence they were received, but the current processing timeframe extends beyond 20 weeks.
To ensure an efficient process, the IRS kindly requests both tax professionals and taxpayers not to submit duplicate amended returns. Instead, it is recommended to regularly check the “Where’s My Amended Return?” tool for the most recent updates on the processing status of their amended return. This will provide the most accurate and up-to-date information available.
Employer’s Quarterly Federal Tax Return (Form 941): Reporting and Paying Federal Taxes
As of May 18, 2023, the IRS is currently managing a backlog of 2.1 million unprocessed employers’ quarterly federal tax returns, specifically Form 941. For taxpayers who filed their returns electronically and received an acknowledgment, no additional steps are required unless requested for further information by the IRS.
It’s important to note that these tax returns are processed in the order they were received. As emphasized by the IRS, it is strongly advised not to file a duplicate tax return. Doing so may hinder the processing and resolution of your original submission.
Stay informed about the progress of your Form 941 by regularly checking for updates from the IRS. Should the need arise, promptly respond to any information requests to facilitate the processing of your return. As of May 17, 2023, the IRS has a total inventory of approximately 879,000 unprocessed Forms 941-X. It’s worth noting that some of these returns cannot be processed until the associated Forms 941 are handled first.
While not all of these returns pertain to COVID-19 credits, the IRS has dedicated two sites, located in Cincinnati and Ogden, with trained staff specifically assigned to address potential COVID-19 credits. These sites are diligently working through the inventory to ensure accurate and timely processing.
The IRS continues its efforts to streamline the processing of Forms 941-X and appreciates taxpayers’ patience during this period.
The IRS acknowledges the need for swift processing and is diligently working to expedite the handling of returns. However, taxpayers are advised to anticipate longer than usual waiting periods for both refund issuance and the processing of amended returns. The IRS is committed to minimizing delays but acknowledges the current challenges and appreciates taxpayers’ understanding and patience during this time.