Have you received an unexpected IRS check recently? You may have been the lucky recipient of a refund of penalties you have paid to the IRS.
As part of the Covid-19 relief measures taken, the IRS have automatically removed many late filing and late payment penalties on tax years 2019 and 2020.
This is relevant to US citizens who filed their 2019 or 2020 tax returns late, and were hit with penalties for late filing and late payment of taxes. With the IRS removing those penalties, the taxpayers who already paid the penalties were refunded. This has been a windfall for people who were late filing taxes, for both personal and business returns.
Another current tax situation is the IRS refusing to release many Recovery Rebate Credit-RRC claims. People who were sent a check for the third stimulus payment but never actually received it are supposed to request the credit on the 2021 return. However, instead of tracing the check and releasing the unused credit, the IRS are simply denying the refund and sending a letter stating that the refund amount was adjusted. This is frustrating especially as they IRS are almost impossible to reach by phone. Mailing in a response is the best option at the moment, although processing times for mailed correspondence can be 8 months or more.
More worrisome is the fact that the IRS have responded to some taxpayers with a second letter, formally disallowing the refund which means the case becomes a more complex and drawn out process. Until the IRS resume normal phone services, there is no easy solution to this issue and it will continue to affect taxpayers until all 2021 tax returns have been processed.
To expedite the processing of your 2021 tax return, make sure to e-file it and not paper mail it to the IRS. E-filing services shut down in November for annual updates, and only reopen in January or February. Any US citizen with a filing obligation who has not yet filed their 2021return should be aware of this fact. Paper filing returns means extremely long processing times with no way of getting updates through the IRS call center.
The IRS claim to be doing all they can to catch up with their processing delays, and have made some headway since last year. Let’s hope 2022 will bring quicker results and refunds for all taxpayers.
