Why Are IRS Tax Refunds Delayed?

Jun 25, 2022

If you've filed your tax return and received a notice of delinquency, you're probably wondering, "Why are IRS Tax Refunds Delayed?" You're not alone. The IRS says that millions of e-filed returns are suspended during the processing stage because of discrepancies, including those related to Recovery Rebate Credit (RRC) claims by taxpayers who didn't receive stimulus payments as EIPs in prior years. As a result, millions of these returns were manual reviewed, and 11 million math error notices were issued to taxpayers. While these delays didn't cause extended refund processing times, they contributed to the paper backlog.

Even though the average number of tax refunds issued by the IRS is less than 21 days, delays are a common problem for individuals and businesses. Delays can occur due to several reasons, including incomplete or transposed numbers on tax returns, fraud, or identity theft. Because the IRS updates its data only once a day, refunds may take up to three weeks to process. The good news is that there are easy ways to check the status of your refund at any time. You can visit the IRS website and create an online account.

The IRS has a backlog of nearly 15 million tax returns that it needs to process. This backlog makes it difficult to process the tax returns for many taxpayers. Even if most individuals receive their refunds on time, the delays cause financial hardship for many. If a taxpayer cannot provide proof of current filing, they will not be able to obtain a loan or a personal loan, and they won't qualify for student financial aid unless they can provide a tax transcript.

While most people don't like to wait for their refunds, there are things that you can do to get yours sooner. Sometimes the IRS will send you a letter or notice saying that your refund has been delayed. There are several reasons for the delay, but the most common reason is simple: you've filed your return, but you're not in a hurry. If you've filed your taxes and received a notice, you might have a hardship that requires a delay.

Another reason for your delayed refund is because you have past-due tax obligations. In these cases, the IRS may take part of your tax refund to pay off your past-due debts. If you owe taxes on your old return, the rest of your refund is deferred until you file the old return. This is an easy way to get your refund, but it may not be the best solution.

If you want your refund as fast as possible, file your tax return online. By filing online early, you will have a better chance of getting your refund sooner. You can also take advantage of free online tax filing services. For example, most people will receive a third stimulus check payment in 2021. This payment is related to the COVID-19 pandemic and isn't taxable, but will have to be reconciled with your tax return to get your recovery rebate credit.