The IRS is holding over 29 million returns for manual processing. These returns are mainly being held up due to COVID-related tax law changes, processing errors, or fraud detection. The most common reason to date is inconsistencies between the amount of stimulus payments reported compared to the actual amount received by the taxpayers.
Unfortunately, the IRS was already short-staffed prior to the pandemic and has only seen things get worse since then. Creating even further complications was the enactment of the American Rescue Plan on March 11, 2021. This caused the IRS to have to adjust reporting requirements for a number of things after the forms had been finalized, this includes the $10,200 of unemployment compensation that is not subject to tax as a result. Rather than inundate the IRS with amended returns, they intend to automatically adjust returns for these changes.
The IRS has 3 million paper filed returns from 2019 and 2020 that they continue to work through. This is frustrating for those of you still waiting for refunds or to resolve notice responses. At this time, there is nothing to do but wait as patiently as possible.
If you have not completed your 2020 tax organizer, now is a good time to address the information that you provide to us. The new filing deadline of May 17, 2021 is quickly approaching. Below are some tips to help us speed up your refund once you file.
Tips to expedite your refund processing
- Fully review and complete the tax organizer
The organizer ensures we have up-to-date contact information for you, including your bank account for direct deposit of refunds
- Provide all of your information to us at one time
Having to circle back for additional information will delay the preparation of your return
- Choose direct deposit for how to receive your refunds
We will need your bank name, account type, routing number and account number
- If you have enrolled in the IRS Identity Protection PIN (IP PIN) program
We need this PIN in order to electronically file the return. This PIN is sent via mail to the taxpayer each year.
Common issues that delay the processing of refunds:
- Not providing insurance documents when receiving insurance from MNSure or similar state health insurance marketplace
We need copies of Forms 1095-A and 1095-B
- Incorrect estimated tax payment amounts
Verify that the payments you made this year match our records in the organizer and provide any notices from the IRS or state that you have received
- Missing 1099s
Verify that we have all of your investment accounts included on the organizer
- Inaccurate amounts for the economic impact payments (stimulus payments)
Confirm the dollar amounts that you received for both payments in April and December.