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IRS head: 6 million tax returns are ‘in suspension;’ thousands of 2019 returns still to be processed

If you have been waiting for your 2019 tax refund to show up, the news from a Senate hearing Wednesday with the head of the Internal Revenue Service may not be very satisfying.

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IRS Commissioner Charles Rettig told senators that the agency is still processing hundreds of thousands of tax returns from the 2019 tax year, and the process is likely to take at least two more months.

Approximately 335,000 tax returns from the previous tax season are still to be processed, Rettig told senators during a hearing Wednesday. That number is down from 7 million that were awaiting processing in January of this year.

In addition, another 6 million returns, many of them 2020 tax returns, are “essentially in suspension,” Rettig told the Appropriations Committee’s Subcommittee on Financial Services and General Government.

Those returns are designated for “error resolution,” which means they will have to be reviewed manually and that could take months.

Since January, the agency has been under bipartisan pressure to answer questions about why returns are taking so long to process.

In March, the Treasury Department issued a statement that said the backlog was due, in part, to “serious challenges stemming from inherited problems and diminished capacity.”

The backlog worsened in the spring of 2020 when the COVID-19 pandemic closed IRS processing centers, Rettig said.

“All of us are hearing from constituents about that backlog,” Sen. Chris Van Hollen, D-Maryland, said in the hearing Wednesday.

In March, Republicans called on the IRS to show a plan for how those returns would be processed.

Rep. Mike Kelly, R-Pennsylvania, the ranking member on the House Ways and Means Committee, also wrote a letter to the agency on behalf of constituents who have contacted lawmakers’ offices trying to track down their income tax refunds.

Kelly said he did not receive a response from the agency, the Washington Post reported.

“We cannot have millions of hard-working Americans and small business owners waiting up to a year to receive money that they are owed, and the federal government paying billions of dollars in interest on top of that,” Kelly said. “This needs to be fixed.”

National Taxpayer Advocate Erin Collins, who leads an independent office at the IRS that helps taxpayers resolve issues with the agency, told The Hill that it should take less than 60 days to process the 335,000 returns.

“If you’re one of those 300,000, that’s nothing to cheer about because most likely your return has been sitting there for over a year,” Collins said.

In addition to the wait for tax refunds, another problem caused by the backlog is that millions of taxpayers have used a provision in the American Rescue Plan Act that allows them to use their 2019 income to calculate their Earned Income Tax Credit amount.

When the 2019 income is used for the Earned Income Tax Credit on the return, the IRS has to manually verify the number, Rettig said, thus slowing down the processing of the return even more.

The same holds true if you claimed a missed stimulus payment on your 2020 tax return. The IRS must manually review tax returns that claimed a credit amount that isn’t the same amount the IRS shows a person should be getting, Rettig said.

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