WASHINGTON, DC – APRIL 15: The Internal Revenue Service (IRS) building stands on April 15, 2019 in … [+]
The IRS continues to make progress on its inventory of tax returns, payments, refunds, and correspondence. However, some sectors are still experiencing delays. Here’s where things stand.
The IRS says it has processed all paper and electronic individual returns received before April 2023, and they are opening mail within normal time frames. This means they have processed all returns for the tax year 2021 or earlier if those returns had no errors or did not require further review.
As of July 8, 2023, the agency had 2.42 million unprocessed individual returns. Those include tax year 2022 returns, 2021 returns that need review or correction, and late filed prior year returns. Of these, 1.6 million returns require error correction or special handling, and 820,000 are paper returns waiting to be reviewed and processed. This work does not typically require taxpayer correspondence, but it does require special handling by an IRS employee, so in these instances, it takes the IRS more than 21 days to issue any related refund.
Current Year
With respect to individual tax returns received in the current year, the IRS will process those for which refunds are due first. Tax returns that reflect tax due are processed last—but, of course, the IRS wants to get paid. If a payment is mailed with the tax return, the payment is separated upon receipt and deposited.
Tax returns that must be manually reviewed due to errors will be processed in the order received.
Some returns need a second look. If the IRS needs more information or requires you to verify that you sent a return, they will send a letter. That could take more than 120 days, depending on how quickly and accurately you respond and how quickly the agency can process your return.
Refunds
The IRS issues most refunds in less than 21 days. However, if you filed on paper and expect a refund, it could take four weeks or more to process your return. Check Where’s My Refund? for more detailed information. Information is available 24 hours after e-filing a tax year 2022 return, three or four days after e-filing a tax year 2020 or 2021 return, and four weeks after filing a paper return.
You can also call the automated refund hotline, 800-829-1954. The hotline cannot give you your refund status for any year other than the 2022 tax year.
If the IRS needs more information to process your return, they will contact you by mail. Be aware that the IRS is still processing your return or correcting an error, the agency will not be able to provide you with your specific refund date.
If you are due a refund and filed on paper more than six months ago and Where’s My Refund? does not indicate that your return has been received, you should resubmit your tax return—electronically if possible. Tax returns must be signed (fresh ink, if on paper) and include all documents submitted with the original return. But if that specific set of facts does not apply to you, do not file your tax return again. That will confuse the IRS.
Amended Returns
As of July 8, 2023, the IRS had 1.29 million unprocessed amended individual tax returns—that’s an uptick from earlier this year and represents additional returns that were received through the tax season. The agency is processing these returns in the order received, and the current timeframe can be more than 20 weeks. With that in mind, don’t file the same return more than once—the pile will only grow larger. Taxpayers should check Where’s My Amended Return? for the status of your refund on an amended return.
Payroll Tax Returns
As of July 13, 2023, the IRS had 266,000 unprocessed Forms 941, Employer’s Quarterly Federal Tax Return. Those returns are processed in the order received.
As of July 12, 2023, the total inventory of unprocessed amended payroll returns was approximately 442,000—many of those are related to Employer Retention Credits (ERCs). Some amended forms cannot be processed until the related 941s are processed. While not all of these returns involve a Covid-19 credit, all the inventory is being worked at just two sites (Cincinnati and Ogden) with staff trained to review those returns.
Tax Exempt Applications
The IRS receives more than 95,000 applications for tax-exempt status each year. Applications are being processed, but there may be significant wait times for review.
Forms 1023-EZ submitted after July 7, 2023, have not yet been assigned to a specialist, while Forms 1023 submitted after November 22, 2022, have not yet been assigned.
With respect to Forms 1024, applications submitted after January 19, 2023, have not yet been assigned to a specialist, while Forms 1024-A submitted after December 15, 2022, have not yet been assigned.
ITINs
The IRS is currently processing Forms W-7, Application for IRS Individual Taxpayer Identification Number, that were received in April 2023. Those are processed in the order they were received—the processing timeframe is currently 12 weeks.
You will be notified once your ITIN is assigned or if the IRS needs more information, including additional documentation. Original identification documents submitted with Form W-7 will be returned to the mailing address of record as quickly as possible. The associated tax return will then be submitted for processing.
Forms 2848 and 8821
The IRS says it is processing third-party authorizations, including Forms 2848 and Forms 8821, in the order received. They cannot currently provide a timeframe for completion.
The IRS recommends submitting those forms through the Tax Pro Account tool, assuming you have a Centralized Authorization Number (CAF) Number.
Note that the Submit Forms 2848 and 8821 Online tool allows both Form 2848 and Form 8821 authorizations to be uploaded online but still requires manual processing.
Practically speaking, tax pros can also submit a Form 2848 to the agent you’re talking with on the phone—via fax (do not expect those to be processed for use in the future).
Notices
The IRS has resumed issuing most notices, including for collections.
If there is an error on your tax return and the IRS can fix it without contacting you, they will. However, if the IRS needs more information or requires you to verify you sent the tax return, they will send you a letter. The resolution of these issues could take more than 120 days, depending on how quickly and accurately you respond and how quickly the IRS can process your return.
Phone Service
The IRS says telephone support is open for taxpayers and tax professionals. This does not mean all calls are being answered—those made during peak times are still advised to try later. I can report that the call-back service is in place on some lines and is working.
Taxpayer Assistance Centers (TAC)
Taxpayer Assistance Centers are open. You can find one near you here online.
Earlier this month, the IRS announced that it is reopening previously closed TACs, and adding additional TACs. You can read more about those here.
Taxpayer Advocate Service (TAS)
All local TAS phone lines are open. If you have a tax problem that you haven’t been able to resolve on your own, or if your IRS problem is causing financial difficulty, the Advocate may be able to help. You can call 877-777-4778 or visit Taxpayer Advocate Service to find your local TAS office phone number.
TAS cannot accept refund delay assistance requests for tax returns that are in suspense, including requests for assistance made through the Systemic Advocacy Management System (SAMS).
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