As many of you know, the IRS shut down most of their operations during the Covid-19 pandemic peak. Most IRS centres were closed and activities halted over a number of months, from March through August. This affected many different elements of IRS output, such as the availability of the IRS customer service phone line, the timeframes for the processing of tax returns, as well as the various audit departments.

Since the IRS centres are located all over the US, they did not all reopen at the same time nor with the same level of activity. This is because the Covid-19 regulations are decided on a state level and therefore the various IRS centres are subject to different laws and regulations depending which state they are located in.

In this article we will discuss how this situation has affected the processing of tax returns.

The IRS website published an update a few months ago asking taxpayers to recalculate all regular IRS timeframes starting August 1, 2020, which is when most IRS centres were reopened and functioning as usual. For example, if a return was filed by mail in April, the IRS expected that the return would be processed within the usual three-month timeframe, calculated from the delayed ‘receipt’ date of August 1, 2020.

However, as time goes on and many taxpayers are still waiting for their refunds, it has become apparent that this was more wishful thinking than actually feasible. The reason is simple. The IRS have returns that have piled up in their mail rooms since March, and the intake continues as usual, which logically would mean at least a four/five-month delay on top of the usual three-month timeframe. In fact, upon calling the IRS in recent weeks, the information given is very different to what was said in August. The IRS representatives have been instructed to read out a prepared explanation to the taxpayers who call in about paper returns filed since the beginning of the shutdown. This statement includes an apology from the IRS and a request for continued patience as they work to process the backlog of returns. It continues to state that the IRS cannot give any timeframe or estimate time frame at this point in time, due to the nature of the delays and workload that they currently have. In fact, an IRS representative explained that although the processing centres are open and functioning, there are often disruptions. About once a week, an IRS employee tests positive for Covid-19. This is followed by a disruption of work and cleaning process which furthers the delays. Which means that the IRS themselves have no idea how or when they will complete the processing of all these tax returns.

This may seem discouraging to taxpayers who have filed paper returns this year. It is important to know that although this does mean extended delays, whoever is eligible for a refund should get it eventually. One very important point to be aware of is that under no circumstances should one send in a second copy of the tax return. This has been repeated by the IRS many times, and it can only cause further delays and confusion, as is always the case when duplicate returns are filed. If you sent your returns with a tracking system or have a post office receipt to prove that it was sent in time, you will always be able to prove to the IRS that your tax return was timely filed to receive your refund. At this point in time it doesn’t seem to be necessary to prove the filing of the return, one just needs to allow the IRS the time for processing.

In some cases, taxpayers have received a notice from the IRS stating that their return was misplaced and asking for a new copy. If one receives such a letter (or is informed by an IRS representative on the phone that this is the case) a complete copy of the original return should be sent to the address listed, together with a copy of the letter received. It is recommended to include the words ‘copy of original’ at the top of the return to ensure that it will not mistakenly be processed as a duplicate tax return.

Tax returns that were electronically filed did not encounter the same delays as paper returns. The timeframe for processing may be slightly longer but the delay is insignificant in comparison to paper returns. If a return was filed electronically and the refund was not received within an extended timeframe, the best course of action is to call the IRS to find out what is holding up the refund. In normal times the IRS would send a letter to inform a taxpayer of an issue or audit. The IRS claim that they are now sending letters again as usual, however in many cases people have not received their letters. It is difficult to know whether this is due to lack of manpower within the IRS or caused by mail disruptions in the taxpayer’s place of residence due to lockdown or other restrictions. This is why calling the IRS is the fastest way to receive information. If one does not understand the explanation given by the representative, one should not hesitate to ask questions or even call back to speak to another representative who may give a clearer explanation.