More than two months after the tax filing deadline, millions of Americans are still waiting for their refund. That's because the IRS is trying to process a backlog of more than 19 million tax returns---most of them paper returns. The agency has set a goal of clearing the backlog by the end of the year---a lofty but likely unrealistic goal. The national taxpayer advocate service reports that will require processing 500,000 returns per week, about double the agency's current pace.
The IRS has complained of being underfunded and understaffed in the past, with the pandemic setting things back even further over the last two years. Derrick Kinney, author and personal finance expert, isn't surprised that the agency doesn't always get its budget requests. "When IRS funding goes before Congress and is up for public debate, most of the American people are going to put funding the IRS on the lower end of their priority scale," he tells KTRH. "They're worried more about inflation and current financial issues."
Still, Congress has allocated $1.5 billion to help reduce the IRS backlog, which the agency says it is using on hiring thousands more people and implementing new technology to speed up processing of returns. The result is they've managed to shave about a million returns off the backlog---with 19 million still to go. "The IRS is such a behemoth organization--well meaning--but I don't think there's an idea right now that says they will have this turned around anytime soon," says Kinney.
The good news is the IRS has also cut back on audits and enforcement, although it is still sending out unpaid tax notices. In the meantime, millions who filed on time await their refund. "So many people count on that tax return to pay for things like their summer travel or their Christmas shopping," says Kinney. "Those are the people who might get hurt in the short term."
"That's why I recommend maybe adjusting your tax withholding for next year or planning to e-file next year, if you can," he continues. "Try to plan better for next year's situation."
That leads us to the poll question this morning.