With growing backlog at the IRS, millions of Americans still waiting for their tax refunds
Millions of U.S. taxpayers are still waiting for their returns to be processed, with an already massive backlog at the IRS growing even larger in the past year, according to a new report from a government watchdog agency.
The backlog of returns has swelled to 12.4 million returns still being processed as of September, an increase of 1.9 million returns from a year earlier, the Government Accountability Office found. As a result, millions of Americans have seen delays in getting their tax refunds, the agency noted.
The GAO's findings come after three brutal tax filing seasons for many taxpayers, with millions of returns caught in limbo as the pandemic posed a series of challenges for the IRS. The tax agency has subsequently hired thousands of new employees in the hope of being better prepared for the 2023 tax filing season, although the IRS recently warned taxpayers not to bank on getting their refunds by any specific date when they file their returns in early 2023.
"The IRS cautions taxpayers not to rely on receiving a 2022 federal tax refund by a certain date, especially when making major purchases or paying bills," the agency said in a November statement. "Some returns may require additional review and may take longer."
In 2022, the average tax refund was about $3,100 — bigger than most people's typical paycheck. Refund delays can put financial pressure on households that were banking on the money to pay down debt, start an emergency fund or make a big purchase.
- Americans could get a tax refund shock next year
- Millions of U.S. taxpayers are still waiting for their refunds
The tax season typically opens in late January, although the IRS hasn't yet announced the official start of the 2023 filing season. Many taxpayers plan on receiving their refund within 21 days — but the IRS' warning last month signals that some Americans may need to wait longer.
Meanwhile, experts are warning taxpayers that their refunds may be smaller in 2023 due to the expiration of many pandemic tax benefits, such as the expanded Child Tax Credit and federal stimulus checks.
The IRS didn't immediately respond to a request for comment.
Few phone calls answered
The GAO findings echo a report published earlier this year by the National Taxpayer Advocate, an independent watchdog within the IRS that in June found the agency faced an even bigger returns backlog for the 2022 tax season than it did the previous year. The delays created "unprecedented financial difficulties" for taxpayers, the NTA said.
The IRS has received $80 billion in new funding through the Inflation Reduction Act, with about half of the money to be spent on upgrading technology and operations in an effort to avoid the kind of delays experienced in the last three years. The remaining funds will be spent on enforcement, such as hiring auditors who can go after tax cheats.
Taxpayers struggled to get IRS employees on the phone in 2022, even though call volumes were lower than in 2021, the GAO report noted.
"However, even with fewer taxpayers calling IRS for assistance, [customer service representatives] answered less than one out of five calls during the 2022 filing season," the GAO noted.
The attrition rate among the agency's returns processing staff stood at about 16% in mid-June, more than double the IRS' overall attrition rate, the GAO said. And about 1 in 5 new recruits leaves the agency within two or three years.
"For every 10 newly hired returns processing staff, IRS needed about four additional staff to offset attrition," the report noted.