CLEVELAND — Claudia Longo is not a procrastinator. She said every year, and she files her taxes early. This year she filed in February.
“We usually are pretty early filing. I don’t like waiting until the last minute,” said Longo. “It’s usually super fast, and the money is in the bank.”
But this year, of course, was not like past years.
In March, the American Rescue Plan became law stating that the first $10,200 of unemployment benefits would not be taxable income. When that happened, Longo’s tax preparer filed an amendment on her behalf.
“Apparently, after we did that, they announced the IRS was going to do everything automatically, with unemployment, but it was too late for us because we had already filed the amendment,” she said.
Five months later, Longo is still waiting for her refund.
“At the beginning, I was just checking my bank, and I thought, well, this is strange,” she said.
She’s called the IRS.
“You wait for an hour sometimes, and it kicks you out of the line. I mean, it’s very frustrating,” said Longo.
She’s called her accountant.
“He said, ‘There’s not a lot I can do. They’re going to give me the same answer that they’re giving to you, and they’re just processing it,’” she said.
She’s logged into IRS’s refund tracker more times than she can count.
“It said it hadn’t been processed,” she said.
She said she is owed about $7,500, which does not account for the child tax credits for her two children.
Meltrice Sharpe is a CPA and the managing partner of CLE Consulting Firm. Among other services, the firm files taxes for businesses and individuals. Sharpe said they, too, are inundated with calls from clients asking when they will get their tax refunds.
“People aren't getting the refunds that they're used to getting in less than 21 days,” said Sharpe. “It can be really frustrating, but the best advice we give people is patience.”
She said the IRS is backlogged, and the organization went into the 2020 tax season with backlogs from 2019.
“It's not that your tax preparer has done something wrong. It's just that there is a backlog,” she said. “The same hour or two that you would be on hold, we are on hold, we are on hold, as well. The same hangup you get, we’re going to get as well.”
Nearly 15 million people throughout the United States are waiting on tax refunds. She noted that the IRS's bad situation is made worse when you add in a pandemic and a labor shortage.
“You think about the IRS employees and what they've had to do over the course of the last year and a half, is process stimulus checks. They're changing tax code and tax laws consistently and constantly using antiquated systems,” said Sharpe.
She is frustrated, too.
“It’s an unfortunate situation. A lot of these people whose refunds are being held up really, really need their money,” she said.
Sharpe noted the best thing you can do is not to call the IRS because you most likely won’t be able to get through to someone who can sort out your situation, but said check on your refund status on the IRS website.
“It won’t give you, you know, why your reason is being held up, but it will tell you, in some instances, that they've received it, it's being processed, it's been suspended," Sharpe said.
Longo and Sharpe echoed the same sentiments about fixing the problem, noting it may be time for elected officials to step in and help.
“It's going to take funding to fund an updated, more efficient tax system. It's going to take funding to hire more people, thinking of potential innovative ways to do things by leveraging outsourcing, third party companies to help with this,” said Sharpe.
Longo reached out to Sen. Sherrod Brown’s office to see if he could help and spoke to a representative who she’s hoping can move things along for her.
“I feel like there’s not a lot I can do,” she said.
Sharpe said she is not confident that the backlog will go away anytime soon and thinks the sheer volume of unprocessed refunds will carry over into the 2021 tax season.
News 5 reached out to Sen. Brown and Sen. Rob Portman’s office for comment. Brown’s office has not gotten back.
A spokesperson for Portman said, “As a member of the Finance Committee, Rob shares the concerns about the backlog and has reached out to the IRS and encouraged them to fix their backlog and other customer service issues.”
The IRS said this:
The IRS is opening mail within normal timeframes. All paper and electronic individual returns received before April 2021 have been processed if the return had no errors or did not require further review. As of July 24, 2021, we had 14.7 million unprocessed individual returns. Unprocessed individual returns include the tax year 2020 returns such as those requiring correction [irs.gov] to the Recovery Rebate Credit amount or validation of 2019 income used to figure the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC). This work does not require us to correspond with taxpayers but does require special handling by an IRS employee, so, in these instances, it is taking the IRS more than 21 days to issue any related refund, and in some cases, this work could take 90 to 120 days. If, as a result, a correction is made to any RRC, EITC or ACTC claimed on the return, the IRS will send taxpayers an explanation. Taxpayers are encouraged to continue to check Where’s My Refund? [irs.gov] for their personalized refund status and can review Tax Season Refund Frequently Asked Questions [irs.gov].
How long you may have to wait: The IRS understands the importance of timely processing tax returns and refund issuance. We have processed all error-free returns received before April 2021 and continue to work on the returns that must be manually reviewed due to errors. We are continuing to reroute tax returns and taxpayer correspondence from behind locations where more staff is available, and we are taking other actions to minimize any delays. Tax returns are opened and processed in the order received. As the return is processed, whether it was filed electronically or on paper, it may be delayed because it has a mistake, including errors concerning the Recovery Rebate Credit, missing information, or suspected identity theft or fraud. If we can fix it without contacting you, we will. If we need more information or need you to verify that it was you who sent the tax return, we will write you a letter. The resolution of these issues could take 90 to 120 days, depending on how quickly and accurately you respond and the ability of IRS staff trained and working under social distancing requirements to complete the processing of your return.
What you should do: In most instances, no further action is needed, but you may check Where’s my refund, or you can view your account [irs.gov]. If you filed electronically and received an acknowledgment, you do not need to take any further action other than promptly responding to any requests for information. If you filed on paper, check. Where’s my refund? If it tells you we have received your return or are processing or reviewing it, we are processing it, but it may be under review. We’re working hard to get through the backlog. Please don’t file a second tax return or contact the IRS about the status of your return.
As for amended returns, there are some situations when that is appropriate:
Most taxpayers need not take any action, and there is no need to call the IRS. However, if taxpayers are now eligible for deductions or credits not claimed on the original return because of the excluded unemployment compensation, they should file a Form 1040-X, Amended U.S. Individual Income Tax Return.
Taxpayers should file an amended return if they:
- did not submit a Schedule 8812 with the original return to claim the Additional Child Tax Credit and are now eligible for the credit after the unemployment compensation exclusion;
- did not submit a Schedule EIC with the original return to claim the Earned Income Tax Credit (with qualifying dependents) and are now eligible for the credit after the unemployment compensation exclusion;
- are now eligible for any other credits and/or deductions not mentioned below. Make sure to include any required forms or schedules.
Taxpayers do not need to file an amended return if they:
- already filed a tax return and did not claim the unemployment exclusion; the IRS will determine the correct taxable amount of unemployment compensation and tax;
- have an adjustment, because of the exclusion, that will increase any non-refundable or refundable credits reported on the original return;
- did not claim the following credits on their tax return but are now eligible when the unemployment exclusion is applied: Recovery Rebate Credit, Earned Income Credit with no qualifying dependents, or the Advance Premium Tax Credit. The IRS will calculate the credit and include it in any overpayment;
- filed a married filing joint return, live in a community property state, and entered a smaller exclusion amount than entitled on Schedule 1, line 8.
Taxpayers will generally receive letters from the IRS within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment, or payment offset for other authorized debts) and the amount of the adjustment.
Jessi Schultz at WEWS first reported this story.