The IRS’s 2021 responsiveness has been rightfully panned. Due to budget constraints, Covid work restrictions for IRS employees, and a huge work increase from administering much of the Economic Recovery Act, the IRS was pounded and thus taxpayers were, too. But, if last year was bad, this year will be worse. Even though IRS employees are back in the office and able to access IRS databases, they are now dealing with the same budget constraints, processing of ERA items and the huge backlog of almost 10 million unprocessed returns accumulated during the height of the shut-down. In an attempt to manage expectations, the Treasury Department (which the IRS is a part of) has already said to expect “enormous challenges” this year. Goody.

How to Handle the IRS’ Service Armageddon this Tax Season

To Call or Not to Call the IRS With A Problem?

If you need help, then you should call the IRS. Be warned, however, that you are likely to be on hold for a long time (up to several hours, unfortunately) or be hung-up on. Yes, you read correctly: you can be on hold for hours and still be hung up on. Believe me, I know because it happens to me regularly. In general, the wait times are the shortest on Wednesday and Thursdays. Why? Mondays are notoriously busy because many people have worked on their taxes over the weekend; this spills into Tuesday. Fridays are busier than Wednesday and Thursday because people working 4-day weeks are often home on Fridays. Also, your shortest wait is typically first thing in the morning, when the IRS phone lines are first staffed, which is at 7 am eastern time. Sorry, Californians – that’s 4 am our time.

Should I File My 2021 Return If My 2020 Return Hasn’t Been Processed Yet?

Yes! Yes! Yes! The law requires that you file a tax return (by April 18th this year unless you file a request for an extension). You are required to file timely, even if the IRS isn’t obligated to respond or process timely (it’s unfair but that’s the way it is). Also, failure-to-file penalties are steep and, if you ever need to file bankruptcy you won’t be able to if you haven’t filed your  tax returns.

There’s also a snag in filing 2021 returns when your 2020 returns haven’t been processed. When filing electronically, one of the verification questions the IRS requires you to enter is Adjusted Gross Income (AGI) from the prior year. What should you put down if the IRS hasn’t processed your 2020 return? Enter $0 zero.

Should I File Paper or Electronically?

It’s more critical than ever before to file electronically. Do NOT file a paper return unless there is absolutely no alternative! Intimidated by websites and the Internet? Then get over it, or hire a tax preparer service that can file electronically for you. Why? Most obviously, the IRS hasn’t processed all 2020 returns yet, so it’ll be a long time before your return is processed. That’s bad news if you’re getting a refund. But, there are many other reasons to avoid filing paper returns: there’s higher error rate that brings unwanted scrutiny of returns from IRS agents, and many other reasons I’ve written about before.

How Long Will It Take to Receive a Refund?

If you want your refund as soon possible (and who doesn’t?), then file electronically, review your return to ensure it is accurate and thus won’t require a manual review by an IRS agent, and request a direct deposit of your refund, rather than a check. If you do all this, then you should receive your refund within 2-4 weeks this year.

February 24, 2022