Tips for filing taxes during coronavirus
CPA and business analyst Dan Geltrude helps navigate filing federal and state taxes amid the coronavirus pandemic.
Some taxpayers may face “extreme delays” in receiving their 2019 refunds, according to a new report from National Taxpayer Advocate Erin Collins on Monday.
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As previously reported by FOX Business, the IRS stopped processing paper returns at the end of March as it began adjusting operations in order to keep employees safe and to comply with coronavirus-related social distancing and stay-at-home guidelines.
According to Monday’s report by Collins, the IRS had 20 million pieces of unopened mail as of May 16 – about half of which were paper returns. The agency estimated it had a backlog of about 4.7 million paper returns at that time – and taxpayers have until July 15 to file.
The agency had only processed about 2.7 million paper returns as of May 22.
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It is not clear when the IRS will resume processing paper returns, but it advised people not to file a second return if they have not yet received any response on their first.
However, these are not the only individuals who could be in for a lengthy refund wait.
The IRS’ Taxpayer Protection Program has “mistakenly” flagged some returns as potential identity theft. During a normal year, the agency sends letters to these people with instructions on how to confirm their identities, and until that process is completed, the refund is not processed. In order to confirm his or her identity, the taxpayer must either call a telephone line, visit a center or authenticate online. However, telephone lines were unmanned for many weeks, and centers were not staffed, meaning individuals could not complete the process in some cases.
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Because the agency suspended notice production as well, many taxpayers may not have been aware that their refunds were being held by the IRS and that they may need to provide additional documentation to the agency or submit an amended return – including those who claimed the Earned Income Tax Credit or the Additional Child Tax Credit.
“In many cases, taxpayers were unaware as to why their refunds were held or what they could do to get them released,” the National Taxpayer Advocate report noted. Some people may still not know why their refunds are being held.
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The delays come at a time when many individuals are experiencing financial hardship as a result of the pandemic. Even during normal tax years, individuals and households rely on tax refunds.
Collins noted that delays can disproportionally affect low-income households.
Luckily, many Americans have already received economic impact payments from the federal government to help them through the pandemic. The IRS has been responsible for issuing those payments as well at a time when it is combating both limited funding and staff.
The IRS began recalling staffers into the office at the end of April for critical work that was unable to be performed remotely.
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