Here's why your tax refund may be delayed in 2022

tax return check
Photo credit Getty Images

Tax filing season begins in just over a week, and taxpayers are urged to file early as the IRS is "in crisis" and refunds are expected to be delayed.

National Taxpayer Advocate Erin Collins submitted an annual report to Congress this week, saying she's deeply concerned about the upcoming filing season.

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The watchdog explained that the IRS is going into the 2022 tax filing season with millions of unprocessed returns from last year, which will make the wait even longer for those expecting a refund check this year.

"At the close of the 2021 filing season, the IRS had 35.3 million returns awaiting manual processing," Collins wrote in her report. "As the IRS is preparing to begin the 2022 filing season, it is poised to carry over millions of unprocessed returns and millions of pieces of taxpayer correspondence, resulting in even longer delays for taxpayers who have been patiently waiting for far too long."

The 2021 filing season was the textbook "perfect storm" and one of the worst filing seasons experienced by tens of millions of taxpayers, according to the report. Millions did not receive refunds timely or updates or adequate information regarding their delays, and it was extremely difficult to reach a customer service representative on the toll-free lines for assistance.

Refund delays that taxpayers experienced in 2021 could be as bad, or potentially even worse, this year, Collins warned.

"The IRS is in crisis and needs to apply resources to its core mission – processing returns and paying the corresponding refunds," she said.

The IRS backlog results from several issues, Collins said, including the COVID-19 pandemic, continued reduced budgets and staffing levels within the IRS, and the impact of multiple legislative changes over the last two years.

While much of the processing delay is related to paper returns,  many taxpayers are still waiting for resolution of their electronically filed tax returns.

"It is important to recognize that, for the most part, the pandemic did not create new challenges for the IRS," Collins claimed, "as much as it highlighted longstanding challenges and areas that require attention."

The report urges the IRS to prioritize the processing of paper returns and issue refunds immediately, as the backlog will only continue to grow as taxpayers start filing this season.

"The IRS does not appear to have any strategic plan in place to immediately address an issue that continues to plague millions – and likely will for the foreseeable future," Collins said. "Taxpayers deserve better than this from the IRS."

The report recommends that Congress provide the IRS with additional funding to complete its core filing season responsibilities.

IRS Commissioner Chuck Rettig said planning for the nation's filing season process is a massive undertaking.

"IRS teams have been working non-stop these past several months to prepare," Rettig said in a statement. "IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us. And we will continue to look for ways to improve. We want to deliver as much as possible while also protecting the health and safety of our employees and taxpayers."

The nation's tax season starts on Monday, January 24, 2022, when the IRS will begin accepting and processing 2021 tax year returns.

The filing deadline to submit 2021 tax returns or an extension to file and pay tax owed is Monday, April 18, 2022, for most taxpayers. Taxpayers in Maine or Massachusetts have until April 19, 2022, to file their returns due to the Patriots' Day holiday in those states.

Taxpayers requesting an extension will have until Monday, October 17, 2022, to file.

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