Millions of Tax Returns Remain Unprocessed as IRS Grapples With Backlog

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KEY POINTS

  • As of June 10, there were 11 million pending individual returns the IRS had to go through.
  • The agency has been plagued by staffing issues for years, but is working on hiring.

Some filers may still have to wait a while for their refunds.

There's a reason so many people were advised to file their tax returns electronically this year. The IRS has, for many months, been sitting on a massive backlog of unprocessed returns. And while it's finally making progress, the agency still has a lot of work to do.

11 million pending returns

First, the good news. The IRS has processed more than 143 million tax returns from 2022, and it's also issued nearly 98 million refunds worth $298 billion collectively. But the IRS is still grappling with a massive backlog that came about well before the 2022 filing season.

During the pandemic, the IRS made the decision to close its field offices due to safety concerns. But as a result, it got behind on processing paper returns. And so now, the agency still, as of June 10, has an estimated 11 million unprocessed returns to go through, including returns received prior to 2022 as well as newer returns.

Ramping up hiring

Even before pandemic-related closures plunged the IRS into catch-up mode, the agency was dealing with staffing shortages that made keeping up with paper returns difficult. Now, the IRS is working on ramping up hiring to try to address the problem at hand.

In fact, IRS Commissioner Chuck Rettig says that as long as the agency doesn't encounter additional hiccups, it should be able to work through its backlog by the end of the year. And as such, the IRS should be able to kick off the 2023 filing season with what it calls a normal inventory of returns.

But still, the reality is that the IRS has long been underfunded, and that's led to situations like the one the agency is in today. And while the IRS does have hiring plans, those have been slow to get off the ground.

How to avoid refund delays

Delays in processing paper tax returns could mean having to wait longer for your refund to hit your bank account. So if you typically file your taxes on paper, you may want to take a different approach to your 2022 tax return, which you'll submit in 2023.

Now if you're used to filing your taxes on paper, the idea of switching over to electronic filing may be daunting. But actually, today's tax-filing software programs make the process of submitting a return quite easy.

Not only that, but if you file your taxes electronically rather than on paper, you may be less likely to make an error that results in your return -- and refund -- getting held up. And, filing electronically could help you get all the tax credits and deductions you're entitled to.

While the IRS is clearly doing its best to work through a mountain of older returns, the reality is that extensive delays could be extremely detrimental to those waiting on a refund -- especially today, what with inflation making living costs so unbearably high. The fact that the IRS has made some progress on its backlog is great news, but clearly, the agency still has more work to do to get out of that hole.

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