35M Unprocessed Tax Returns Remain: What That Means For You

WASHINGTON, DC — The Internal Revenue Service is drowning beneath an unprecedented backlog of nearly 35 million unprocessed tax returns, according to a government watchdog report released this week.

The report was issued by National Taxpayer Advocate Erin Collins, whose office is an independent agency within the IRS, according to Business Insider.

So far this year, the IRS has processed 136 million individual income tax returns and issued 96 million refunds totaling $270 billion, the report said. The figures that are in line with 2019 and a typical filing season. You can read the full advocacy report online.

Still, the IRS remained woefully behind. Here’s how it happened, how it might affect you and what you can do about it.

How Did This Happen?

The report comes on the heels of a particularly challenging and busy time for the federal agency. In addition to processing 2020 tax returns, the IRS has been strapped with new pandemic-era duties.

The IRS was responsible for overseeing financial relief for 170 million individuals and millions of businesses through three rounds of stimulus payments, Paycheck Protection Program loans and other programs.

Now, the IRS must also oversee the distribution of advance child tax credit payments to millions of American families. Those payments started in July and will continue through December.

Finally, the agency is also struggling with budget cuts. A 2020 report from the House budget committee found that the agency's budget had been cut by 20 percent from 2010 to 2018.

How Far Behind Is The IRS?

The current backlog consists of 17 million paper tax returns that aren't processed yet, 16 million other returns that require a review, and an additional 2.7 million amended tax returns that are still not processed.

The size of the tax return backlog is four times larger than that of 2019, Business Insider reported.

The report also noted that the IRS received more telephone calls during the 2021 filing season than it had ever received in a full fiscal year.

During the height of the filing season, the IRS at one point was receiving telephone calls at a rate of about 1,500 per second. This means only 7 percent of calls were answered, the report said.

Who Will This Affect Most?

The IRS' historically high number of returns requiring manual review means that most individual taxpayers in this group and many business taxpayers will not receive timely refunds, the report said. All will have to wait until the IRS eventually processes their returns.

“For taxpayers who can afford to wait, the best advice is to be patient and give the IRS time to work through its processing backlog,” the report said. “But particularly for low-income taxpayers
and small businesses operating on the margin, refund delays can impose significant financial hardships. Not everyone can afford to be patient.”

Did The IRS Issue A Timeline For My Refund?

No, the report offered no timeframe as to when people might get their refunds.

Can I Check On My Refund Status?

You can check your refund status on the IRS website or on the IRS2Go app. All you need is your social security number or tax identification number, your filing status and your exact refund amount.