Understanding IRS E-filed Tax Return Processing Delays

The Internal Revenue Service (IRS) processes millions of e-filed tax returns each year. However, recent updates and changes in procedures can result in delays that frustrate many taxpayers. This article delves into the reasons behind these delays and what you can expect during the tax return processing period.

Why Are E-filed Tax Returns Delayed?

As of early 2021, the IRS was still accepting e-filed tax returns for the 2020 tax year on a delayed schedule. The processing of returns began on February 12, 2021, according to the IRS. Prior to this date, returns were in a pending status, waiting to be accepted by the IRS after the system officially opened.

For those who had submitted their returns early, there has been a noticeable delay. The IRS emphasizes that their workload, including the training of new agents and agents, contributed to the current backlog. As a result, taxpayers can expect their returns to be processed within 4 to 6 weeks, rather than the usual processing time.

What to Expect During the Processing Period?

During the processing period, taxpayers should be prepared for various scenarios, including:

An initial acknowledgment from the IRS: Taxpayers may receive an electronic notice confirming that their return has been received. However, this doesn't always guarantee acceptance, as further validation is required. Potential missing information: If the return is missing crucial documents such as W-2 forms or 1095-A forms, the IRS will send a letter requesting additional documentation. This can significantly delay the processing time, potentially extending to 6 to 8 weeks. Handling of "Paper Returns": If a taxpayer responds to the IRS request on paper, the return is considered a "paper return." This rewinds the processing cycle, extending the expected timeline. Direct Contact with IRS Support: If there's been more than 72 hours since the return was submitted, taxpayers should reach out to TurboTax support for assistance. They can help identify and resolve any issues that may have caused delays.

Stimulus Payments and Refunds

During this period, the IRS is primarily focused on granting tax refunds and processing e-filed returns. Therefore, the initial processing and approval of stimulus payments might be slower, with expected disbursements around Labor Day. These payments are made directly to taxpayers based on the information provided on their returns.

Additionally, taxpayers may notice that their refund will incur interest due to the delay. This is a common practice when refunds are issued later than expected. The delay allows the government to use the funds in the meantime.

Conclusion

The processing delays for e-filed tax returns stem from various factors, including system updates and the need to process a large volume of returns. While these delays may be frustrating, it is crucial to understand the process and be patient. For any issues, reaching out to the appropriate support channels can help expedite the resolution. As always, the IRS continues to work towards improving efficiency and providing the best service to taxpayers.