Are you still waiting to hear something from the IRS about the status of your tax return? The agency recently issued updates about filing and processing. Here’s what you need to know.
According to the IRS, all paper and electronic individual returns received before January 2023 have been processed. Additionally, the agency claims it is opening mail within normal time frames. This means, they say, that all returns received for the tax year 2021 or earlier have been processed—if those returns had no errors or did not require further review.
Unprocessed Returns
As of May 13, 2023, the IRS had 4.2 million unprocessed individual returns—yes, that number is higher than reported just a few weeks ago. That number includes tax year 2022 returns, 2021 returns that need review or correction, and late filed prior year returns.
Of the unprocessed individual returns, 2 million returns require error correction or other special handling, and 2.2 million are paper returns waiting to be reviewed and processed, nearly 3/4 million more than two weeks ago. These returns require special handling by an IRS employee, so in these instances, it will take the IRS more than 21 days to issue any related refund.
Current Tax Season
When it comes to individual tax returns received in the current year, the IRS will process those for which refunds are due first. Tax returns that reflect tax due are processed last—but, of course, the IRS wants to get paid. If a payment is mailed with the tax return, the payment is separated upon receipt and deposited.
Tax returns that need to be manually reviewed due to errors will be processed in the order received.
Some returns need a second look. If the IRS needs more information or requires you to verify you sent the return, they will send a letter. That could take more than 120 days, depending on how quickly and accurately you respond and how quickly the agency can process your return.
Identity Theft
Identity theft continues to be a problem for taxpayers. According to a recent Treasury Inspector General for Tax Administration (TIGTA) report, for the 2023 filing season, the IRS used 40% more filters than last year to identify potential identity theft tax returns and stop fraudulent refunds. Tax returns that are flagged by these filters are held. If you receive a 4883C or 6330C letter, that means that the IRS requires you to verify your identity and your tax return before they can finish processing it. Follow the steps on the letter, which may include verifying your identity online.
As of March 2, 2023, the IRS reported that it had identified nearly 1.1 million tax returns with refunds totaling approximately $6.3 billion for additional review due to the filters. Also as of March 2, the IRS had confirmed 12,617 tax returns as fraudulent and prevented the issuance of $105.3 million in fraudulent refunds.
Refunds
The IRS issues most refunds in less than 21 calendar days. However, if you filed on paper and expect a refund, it could take four weeks or more to process your return. Check Where’s My Refund? for more detailed information. Information is available 24 hours after e-filing a tax year 2022 return, three or four days after e-filing a tax year 2020 or 2021 return, and four weeks after filing a paper return.
You can also call the automated refund hotline, 800-829-1954. Please note that the hotline cannot give you your refund status for any year other than the 2022 tax year. According to the IRS, Where’s My Refund? is the only automated source to receive updated information for prior years.
If the IRS needs more information to process your return, they will contact you by mail. Be aware that the IRS is still processing your return or correcting an error, the agency will not be able to provide you with your specific refund date.
If you are due a refund and filed on paper more than six months ago and Where’s My Refund? does not indicate that your return has been received, you should resubmit your tax return—electronically if possible. Tax returns must be signed (fresh ink, if on paper) and include all documents submitted with the original return. But if that very specific set of facts does not apply to you, do not file your tax return again. That will confuse the IRS. For information about the processing of your return, check Where’s My Refund? or click over to your Online Account for possible updates.
Amended Returns
As of May 13, 2023, the IRS had 1.43 million unprocessed Forms 1040-X, amended returns—more than half a million more than before. The agency is processing these returns in the order received, and the current timeframe can be more than 20 weeks. With that in mind, don’t file the same return more than once—the pile will grow larger. You should check Where’s My Amended Return? if you’re looking for the status of your refund on an amended return.
Payroll Returns
As of May 18, 2023, the IRS had 2.1 million unprocessed Forms 941, Employer’s Quarterly Federal Tax Return. These tax returns are processed in the order received.
As of May 17, 2023, the total inventory of unprocessed Forms 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, was approximately 879,000. Since these returns are for those taxpayers seeking adjustments, some forms cannot be processed until the related 941s are processed. While not all of these returns involve a Covid-19 credit, such as Employee Retention Credits, all of the inventory is being worked at just two sites (Cincinnati and Ogden) with staff trained to review Covid-19 credit returns.
What Comes Next
Our Forbes tax team will provide additional updates as they become available.
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