As taxes come due, millions of Americans are still waiting on their refunds from last year

• Over the last two years, the underfunded and understaffed IRS was swamped with new responsibilities.
• The result was a backlog of tax returns, with millions of Americans still waiting for their 2020 refunds.

Melanie Jones Owen is dejected.

The 47-year-old business owner from California is one of millions of Americans still waiting on a tax refund from 2020, after filing her return in March 2021. She's waiting on over $16,000 — money that could help keep her pandemic-shaken engineering business afloat.

"At a time when my world is devastated beyond words because of this pandemic, I cannot even count on the IRS to do the job that they are sworn to do," Owen said.

During the pandemic, the IRS dealt with a perfect storm of new responsibilities, paired with underfunding and understaffing. The result is a backlog of millions of unprocessed tax returns, leaving some Americans waiting for nearly a year to get refund checks that help them afford groceries, childcare, and even their homes. As millions of Americans sort through their 2021 documents in preparation of filing a new return, many are hoping this year's checks don't get caught up for months in a stack of papers at IRS headquarters.

"I'm concerned, because if I go ahead and do my taxes now, is it going to hurt the ones I'm still waiting on?" Owen said. "Is it going to throw the system off?"

"You're just stuck in absolute and complete limbo"

During the pandemic, the IRS accumulated a historic backlog of returns.

At the end of 2021, National Taxpayer Advocate Erin Collins said 6.2 million individual returns remain unprocessed.

But they are chipping away at that pile: Commissioner Chuck Rettig testified at an April 7 Congressional hearing that the agency still had 2.7 million paper returns filed in 2021 in their inventory.

"Paper is the IRS's kryptonite, and the agency is still buried in it," Collins said in her annual report.

Laura Spencer's tax return is likely somewhere in those piles of paper.

The 40-year-old Georgia-based data analyst sat down with her new husband in April 2021 to file their tax return jointly for the first time. It got rejected. They dealt with a circular series of events involving an anti-identity theft pin that never arrived and one of the IRS's biggest customer service issues in 2021: reaching an agent on the phone. In 2021, according to Collins, the IRS received a record number of phone calls — and only about 11% were answered.

After two months of trying, Spencer got through and learned she had to mail in the return. She said they did that in September, and there's been no sign of it since. Treasury officials have warned taxpayers away from filing on paper if at all possible, as the IRS sits on a mountain of paper.

The couple is waiting on a little over $11,000. In the last year, Spencer lost her job and her husband started a business that he later shut down. Spencer said she believes it could've stayed afloat if they had more money for him to hire employees: "Having an extra $11,000 would've gotten us a really long way."

To cover health expenses and rent, she said, they borrowed money from relatives, took out a loan, and cashed out a small 401K.

"You're just stuck in absolute and complete limbo," Spencer said. She's employed now, and said she already filed her 2021 taxes. If both refunds came tomorrow, she said, the total would pay off everything they've borrowed.

"You got to laugh not to cry"

The IRS has outlined its attempts to get back on track, which includes everything from hiring 10,000 employees to implementing callback software.

But that hasn't changed anything for Isabelle Ertl.

Texas-based Ertl, 21, works two jobs — one as a cashier and another as a sales associate. In 2020, she was working a full-time job and two part-time jobs. "Money was tight," she said.

The $2,200 she says she was supposed to receive from her 2020 tax refund would've been a "big help."

"It's either pay my bills, fix my truck, or not eat for the time," Ertl said. "So that money would've helped everything."

She's still waiting for her refund. She said that she called the IRS every day for about a month to try to get through.

"My parents, they've already gotten their taxes back for this year, and my whole family and all my friends have gotten their taxes back for this year, but I still haven't gotten them back from last year," Ertl said. When it comes to the IRS's backlog, "they shouldn't be that backtracked if they can get 'em out this year and not finish up last year's."

Ertl is expecting another refund this year, but is worried she won't get it: "I still severely need it."

In prepared testimony, Rettig — the IRS commissioner — said that the IRS realized taxpayers waiting on 2020 refunds are wondering if they should wait to file 2021 returns.

"Our message to these individuals is that they can file their 2021 return when they are ready," Rettig said in his testimony. Electronic filers "should validate their 2021 electronic tax return by entering $0" for their adjusted gross income (AGI) from last year. People who hadn't filed before, but signed up to receive child tax credit checks or stimulus checks, should put $1 for their AGI.

Rettig has said the backlog should be cleared by December.

When Spencer called the IRS — she finally got through by following the advice of a website that told her what numbers to push to get around getting put on hold — she asked how her 2021 return could be verified and processed if 2020 is still sitting in the pile. As a data analyst, she said it makes sense for things to go in a chronological order, like processing a tax return for 2020 before 2021.

The representative told her that the IRS doesn't recommend filing your taxes late, because she didn't want to incur any potential penalties if she owed money.

"You got to laugh not to cry because, well, what about the money you guys have of mine?" Spencer said. "Like, are you gonna pay me interest in penalties because you haven't processed my return yet?"