- Taxpayers may encounter an underfunded and understaffed
IRS this tax filing season. - Some say they're still dealing with refund delays from previous years.
It's a new tax season, but the ghosts of tax returns past are still lingering at the overburdened IRS.
In the 24 hours after I published a story this weekend about Rachel Cannistraro, a mother in Wisconsin who had been waiting on her 2020 tax return for months, I received over 100 emails from readers with similar experiences.
Some writers said they had been waiting for years on refunds from the 2019 tax season. Multiple claimed that they were owed over $10,000. Several wrote in that they had been waiting on refunds for deceased loved ones, meaning that they had to keep bank accounts open in the name of someone they lost whose estate they want to settle.
The result of sharp decreases in funding to the IRS — and the number of staff falling — is being felt by millions of Americans. The Tax Policy Center finds that the IRS's budget has fallen by over 20% in the last decade. During that time, the agency's number of full-time-equivalent staff fell by nearly 20%, too. President Joe Biden's Build Back Better Act would have infused major funding into the agency; the only problem is that the legislation is still in limbo. The IRS has also dealt with pandemic closures and new responsibilities in the form of stimulus checks and expanded tax credits.
For Cannistraro, the delay in processing meant she wasn't able to get the advanced child tax credit checks that President Joe Biden started sending parents in July. All told, with both the return and the lack of advanced child tax credit checks, she's waiting on nearly $6,000 from the IRS.
"I know that there are many other families that go through something very similar to this, that this is a big deal — not having a thousand dollars to them could mean not having food," Cannistraro told me.
Erin Collins, the national taxpayer advocate, said that the IRS had 6 million unprocessed returns as of mid-December. That backlog is the backdrop for this year's tax season, where filers with more complex filings may find themselves dealing with delays on top of the paper that the agency is "buried in," according to Collins.
When Insider previously reached out to the IRS about potential delays, an IRS spokesperson pointed to its statement on providing assistance to taxpayers while being underfunded.
Others wrote in about economic hardship, and what it means to not receive a refund. Fiona Greig, a co-president of the JPMorgan Chase Institute, previously told me that refund time is normally (aka in not-pandemic times) a huge cash-flow event for families. In fact, for 40% of families pre-pandemic, "this is the single largest cash infusion of the year." Delays in that cash flow could have serious consequences for families' financial standing; according to my inbox, that's already been happening.
How desperate were Americans to find out where their refunds were? Collins said that taxpayers checked the IRS's "Where's My Refund?" tool over 632 million times last years — but even that tool "did not do its job" for taxpayers facing significant delays, since it doesn't give information on unprocessed returns or explain why the status of a return is delayed.
"One irony of the past year is that, despite its challenges, the IRS performed well under the circumstances," Collins said in her report. "The imbalance between the IRS's workload and its resources has never been greater."