Treasury warns of delayed tax refunds due to 'enormous challenges'

The Treasury Department is warning that tax refunds and other services may be delayed this year because of “enormous challenges" including the coronavirus pandemic and previous budget cuts made at the Internal Revenue Service (IRS).

Treasury officials told reporters during a phone all on Monday that they are predicting a “frustrating season” for taxpayers and tax preparers because of factors that also included federal stimulus actions, according to The Washington Post.

The IRS is also entering filing season with a large backlog of unaddressed returns, officials told reporters. The agency usually has about one million unaddressed returns, but this year’s number could be “several times” that, a Treasury official said, according to the Post. They declined to provide a more exact prediction.

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An independent watchdog revealed in June that the IRS ended last year’s filing season with more than 35 million individual and business tax returns that had not been processed, reportedly a fourfold increase from the year before the pandemic.

With the pandemic triggering lockdowns, a number of in-person tax centers that typically processed paper forms were forced to close, the Post noted. Additionally, the IRS is grappling with GOP-led budget cuts that led to a roughly 25 percent decrease in staff size.

All those existing challenges were magnified by the U.S.’s economic response to the pandemic, which included trillions of dollars for new programs to support Americans.

IRS Commissioner Chuck Rettig wrote in a statement that the COVID-19 pandemic “continues to create challenges,” but said the agency “reminds people there are important steps they can take to help ensure their tax return and refund don't face processing delays.”

The deadline for filing taxes for 2021 income is April 18. The IRS will start accepting individual income-tax returns for 2021 on Jan. 24.

Rettig said planning for filing season in the U.S. is “a massive undertaking,” adding that teams at the agency “have been working non-stop these past several months to prepare.”

Treasury officials told reporters that there is no plan in place at this moment to prolong that deadline, encouraging individuals to file early, according to the Post. They also urged individuals to make an account on the IRS website and file returns online.

“Filing electronically with direct deposit and avoiding a paper tax return is more important than ever this year. And we urge extra attention to those who received an Economic Impact Payment or an advance Child Tax Credit last year. People should make sure they report the correct amount on their tax return to avoid delays,” Rettig said in a statement.