Internal Revenue Service (IRS)

IRS struggles with tax refunds and stimulus holdups

Millions of Americans are reportedly yet to receive the entirety of their stimulus payments approved in Spring 2020

Tax refunds look set to run into the upcoming season as the Internal Revenue Service (IRS) continues to face challenges as a direct result of the Covid-19 pandemic.

Moreover, millions of Americans are reportedly yet to receive the entirety of their stimulus payments approved in what was “an extraordinarily challenging year for tax administration”.

A report laid out by Erin Collins, head of the Taxpayer Advocate Service, an independent office housed in the IRS, recognised that “some taxpayers experienced major problems, and the agency was not always fully transparent about its struggles”.

The report claimed that the tax refunds were delayed due to the 16 million paper returns that the IRS was slow to process during the start of the pandemic.

Some 6.9 million individual returns remained unprocessed as of 25 December 2020, according to the National Taxpayer Advocate’s report to Congress.

Collins said in the report: “While the IRS’s inclination to use automation wherever possible is understandable in light of its human-resource constraints, its approach left taxpayers frustrated and without the funds some of them desperately needed.

“The challenges created by the Covid-19 pandemic will continue through the 2021 filing season and possibly for months longer, affecting both the IRS and taxpayers.”

She added that while it has been a difficult year, she expects that the IRS has “learned from the 2020 experience and will improve on its performance in the coming months”.

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