IRS Backlog Update for 2022-Returns are being processed!

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IRS Backlog Update for 2022-Returns are being processed!

The IRS is still digging through millions of unprocessed tax returns. The IRS backlog, created by years of budget cuts, understaffing, pandemic-related office closures and added duties, should be resolved before December according to IRS Commissioner Charles Rettig. In a statement issued June 2022, the IRS said it has successfully processed the vast majority of tax returns filed this year and should be done by the end of June. More than 143 million returns have been processed overall, with nearly 98 million refunds worth more than $298 billion being issued.

The IRS had 11 million unprocessed individual returns, which include returns received before 2022, in addition to new returns received this year for tax year 2021. Of these, 1.9 million returns require error correction or other special handling, and 9.1 million are paper returns that are waiting to be reviewed and processed. Over 143 million returns have been processed overall this year, with almost 98 million refunds worth more than $298 billion being issued.

The IRS is opening mail within normal timeframes and all paper and electronic individual refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review. This work does not typically require the IRS to correspond with taxpayers but does require special handling by an IRS employee. The IRS approximates it takes 21 days to issue any related refund though some cases could take 90 to 120 days. If a correction is made to any Recovery Rebate Credit, Child Tax Credit, Earned Income Tax Credit or Additional Child Tax Credit claimed on the return, the IRS will send taxpayers an explanation. Taxpayers are encouraged to continue to check Where’s My Refund? for their personalized refund status.

Statements from the IRS stress that they understand the importance of timely processing of tax returns and refund issuance. They report that all error free refund returns received prior to April 2021 have been processed.

If you filed electronically and received an acknowledgement, you do not need to take any further action other than promptly responding to any requests for information. If you filed on paper, check Where’s My Refund? The site tells you the IRS has received your return or that they are processing or reviewing it. Please don’t file a second tax return or contact the IRS about the status of your return.

Status of Processing Form 1040-X, Amended Individual Tax Return: In May 2022, the IRS had 2.3 million unprocessed Forms 1040-X. They are processing these returns in the order received. The current timeframe can be more than 20 weeks instead of up to 16.

Status of Unemployment Compensation Exclusion Corrections: The IRS continues to review tax year 2020 returns and process corrections for taxpayers who paid taxes on unemployment compensation, to exclude the compensation from income if eligible. Some taxpayers will receive refunds, while others will have the overpayment applied to taxes due or other debts. The IRS will mail a letter to affected taxpayers to inform them of the corrections, generally within 30 days from when the corrections were completed.

Status of Processing Form 941, Employer’s Quarterly Federal Tax Return: The IRS is now opening mail within normal timeframes. As of May 25, 2022, they had 3.7 million unprocessed Forms 941. Tax returns are opened in the order received. If you filed electronically and received an acknowledgement, you do not need to take any further action.

As of May 2022, the IRS’s total inventory of unprocessed Forms 941-X was approximately 241,000, some of which cannot be processed until the related 941s are processed. While not all these returns involve a COVID credit, the inventory is being worked at two sites (Cincinnati and Ogden) that have trained staff to work possible COVID credits.