IRS Holding Refunds
1040 income tax form and w-2 wage statement with a federal Treasury refund check. Closeup with selective focusing.

The IRS is holding 29 million tax returns for manual processing, delaying tax refunds for many Americans, according to the National Taxpayer Advocate, an independent arm of the tax agency that looks out for consumers’ interest. The delays are prompting some taxpayers to fret over social media about weeks of waiting in limbo for their money.

Typically, the IRS sends most refunds within three weeks of taxpayers filing their return. But this year is complicated by a several issues, including a backlog of 2019 paper tax returns that the IRS was unable to process after shuttering its offices during the coronavirus pandemic.

recent notice from the IRS said that some people may experience a longer than average wait for their payments. That may especially impact tax returns that need a correction due to changes made by the Recovery Rebate Credit — a tax credit adjustment for people who were owed more stimulus money — or to verify income for the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC), according to the agency.

“This work does not require us to correspond with taxpayers but does require special handling by an IRS employee, so in these instances, it is taking the IRS more than 21 days to issue any related refund,” the IRS said in a March 18 post.

To be sure, the IRS has processed far more tax returns than not, with Taxpayer Advocate Erin M. Collins noting in a blog post this week that the tax agency has gone through more than 91 million individual tax returns filed for the 2020 tax year and issued more than 68 million refunds so far. The IRS has also distributed more than 161 million payments for the third stimulus check over the past several weeks, adding to its workload during the current tax season.

But that may not provide much comfort to the millions of households still waiting for their tax refunds.

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