Wednesday, February 1, 2012

If you filed early and your refund is later than expected,

it is probably NOT about you!  It is probably NOT about your preparer either.

Paid preparers are getting an unusual number of complaints about delayed refunds from this year's early filers.  I have heard stories of unhappy taxpayers demanding their W-2s back and wanting to take them elsewhere to efile, only to learn that it is too late to go elsewhere after the original efile has been accepted by the IRS.

It is frustrating for early filers when they hear from friends who filed later that they have already gotten their refunds.  Rent is due today and it may be hard for their landlord to believe them that they are waiting on a refund that was supposed to arrive today, if another tenant has already gotten his refund and paid his rent.

We are getting reports of problems from early filers at VITA sites also.

Here is what I am telling our taxpayers:

The IRS has modernized its efile system. 
The good news is that our IRS acknowledgements accepting our efiles are coming back in record time, generally within an hour of submission, thanks to the new modernized efile process (MeF)!  Even our New York State acknowledgements are coming back sooner than before (generally in less than a day), despite the fact that New York State is still on "Legacy efile."
More good news:  the IRS has implemented new security procedures to cut down on the growing serious problems of tax fraud and identity theft.

Not so good news:  these new security procedures had some early glitches that need to be ironed out.  The IRS is reporting that returns efiled in the first week of the filing season (1/17 to 1/24) may take up to a week longer to process than predicted.  Many taxpayers with direct deposit refunds, who were accustomed to receiving them within 10 to 15 days, may need to wait an extra week.
More not so good news:  Some taxpayers are getting alarming reports on Where's my refund? for those early efiles.  In some cases, Where's my Refund? is telling them that their efiled direct deposit refunds may take up to six weeks, rather than the originally predicted 10 to 15 days.  I am guessing that this is a projected "worst case scenario" that the IRS is using to manage expectations from taxpayers.  I hope (and pray!) that those refunds will arrive long before six weeks.
The problem is that the overwhelming majority of past taxpayers are used to receiving their refunds on schedule, with the IRS machinery running like clockwork.  There were notable exceptions, especially when Congress acted at the last minute on late December tax law updates, but we were usually able to explain and anticipate these for taxpayers.

This year, we have no clue why so many taxpayers with simple, straightforward, and clearly NONfraudulent returns are finding their refunds held up in processing with no clear answers.
All I can say to you is that it is NOT about you, the overwhelmingly honest and compliant majority of taxpayers.  It is also NOT about all the honest professional tax preparers and VITA sites out there.
Unfortunately, there is a tiny number of fraudulent filers that are screwing up the process for everyone, and the IRS is doing its best to weed them out to preserve the integrity of the system for those who are honest.
Also unfortunately, that is holding up the process for many people, most of whom are completely innocent of fraud.  Because the system is new, it is taking more time than originally expected.

It is also hard to explain why some people are stuck in fraud filters, and others are not.  I can say that it is happening to many taxpayers and preparers around the country who are completely honest and straightforward on their tax returns.
The IRS has put out an official statement saying that it regrets the inconvenience to taxpayers.
I am here to add to that statement, because I think more needs to be said, and I know that the folks at the IRS are too busy working on the problem to say it.
I recognize that for many of you, a delayed refund does not just mean "inconvenience."  Inconvenience is a word that may apply to the middle class and others well above the poverty line.
The right word for many of our clients is not "inconvenience," but "increased hardship."
I understand, and I am sorry.  
Please stay in touch--I want to hear from you.  Please let me know when your refund comes in.  And if it is delayed more than 10 days since you last checked in with me, please let me know.

Many of our VITA site early filing clients were already suffering hardship when they came into file early.  Many are struggling with unemployment, disabilities, health problems, and other difficulties.  They are worried about keeping the heat on in their homes, the landlord at bay, the car from being repossessed, paying the copays for the prescription drugs they need.  For many VITA site clients, their refund means the difference between living below the poverty line and above it.

I am deeply sorry for the increased hardship, uncertainty, and confusion for all the honest early taxpayers all over the country who are waiting in uncertainty.

I know that the folks at the IRS are also sorry, and are working as hard as they possibly can to make things right for you.


  1. Your post offered more insight than any other explanation I've read. I feel like folks should have offered up info when this whole thing started--I understand that new systems hiccup but don't act like it's my fault.
    Thanks again from one stuck in the net :)
    Filed 2/5 and I know nothing

  2. I copied your URL and sent it out to my tax clients. The IRS website is telling all my clients that their refunds will hit 3/06. Goodness, and this is for clients for whom I filed on 2/04. That's way longer than 21 days too.

    Thanks for your clear explanation.