Why is my tax refund taking so long?

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ALBANY, N.Y. (WTEN) – People waiting for their federal refunds should know it could be a while before they see any money. Tax preparers say they are seeing a delay in the processing of tax returns with some refunds taking months to land in bank accounts.

Bill Dardanelli, the owner of Capital District Tax Services in New York, said this year is highly unusual and unlike any other year of his 35 in the business. Processing delays aren’t the only problem, trying to contact the Internal Revenue Service (IRS) has also been difficult.

“We’ve never encountered a problem like this,” he said.

It’s bad enough some of Dardanelli’s clients who filed their taxes in February are still waiting for their refunds, but there are lengthy waits for people trying to call the IRS. Dealings in the past with the IRS have always been successful, Dardanelli said. But, this year even the IRS contact for professional tax preparers has not been helpful.

Ed Canty, a certified financial planner with Canty Financial Management, said they are not only seeing delays with the processing of federal returns but with New York state returns also. He said there have been long delays in the processing of more complex returns that involve things like multiple sources of income, unemployment, and rental property.

Many different factors can affect the timing of your refund after we receive your return. Even though we issue most refunds in less than 21 days, it’s possible your refund may take longer. Also, remember to take into consideration the time it takes for your financial institution to post the refund to your account or for you to receive it by mail.

IRS

A series of stimulus payments and monthly child tax credits from the federal government, to help people navigate COVID financial woes, are adding complications for an agency geared more toward taking in revenue than disbursing payments.

Additional credits were made available to people who filed for unemployment when the American Rescue Plan was signed on March 11. The IRS announced at the end of March that they would be amending returns for people who collected unemployment within a certain tax bracket that had already filed their taxes.

To ensure that all Americans received stimulus money, the IRS told taxpayers that everyone should file their taxes. Between more returns, unemployment amendments, issuing stimulus money and processing regular returns, the IRS has had its work cut out for them.

Owner of American Tax Depot, Gary Edwards, said he’s doing his best to keep clients calm. He said he understands the immensity of the IRS’ workload but said they could have waited to amend unemployment returns and opted to first take care of regular filings.

The IRS also encouraged people to file early in anticipation of delays this year. Edwards said people who are just filing their taxes have a better chance of seeing their refunds sooner than people who filed in February. He believes this is in part because people rushed to file early creating a bottleneck effect.

“I would say about 1-2% of Federal returns we filed are experiencing an extreme delay in issuance of the refund with no explanation from IRS. The same thing happened last year. I had never seen it before the pandemic,” said Chris Tretter, Tretter CPA, P.C.

People who have not received their refund after 21 days may be wondering what the hold-up is. The IRS website said it could be for one of the following reasons:

  • Errors, such as incorrect Recovery Rebate Credit
  • Because it’s incomplete
  • It needs further review in general
  • It’s affected by identity theft or fraud
  • It includes a claim filed for an Earned Income Tax Credit or an Additional Child Tax Credit
  • It includes a Form 8379, Injured Spouse Allocation PDF, which could take up to 14 weeks to process

Tretter said the IRS won’t call or email, but they may send a letter about the reasons for your delay. People who receive such a letter from the IRS should follow the instructions as soon as possible and if they are working with a tax preparer to let them know what’s going on too.

“If the IRS has not reached out, the taxpayer may have fallen into this black hole we’ve seen emerge in the last two years,” Tretter said.

He suggests people who do not have success calling about their returns hire a tax professional to represent them before the IRS. The Taxpayer Advocate Service is also a good resource for people who need help navigating disputes and other issues with the IRS.

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