IRS Progress and Delays: July 2023 Update. The IRS has made significant strides in processing tax returns, payments, refunds, and correspondence, but certain areas still face delays. Here’s the current status:
All paper and electronic individual returns received before April 2023 have been processed, with mail opening within normal time frames. This includes returns for tax year 2021 or earlier without errors or further review requirements.
As of July 8, 2023, the agency had 2.42 million unprocessed individual returns. This includes tax year 2022 returns, 2021 returns needing review or correction, and late-filed prior year returns. Among these, 1.6 million returns require error correction or special handling, while 820,000 are paper returns awaiting review and processing. Special handling by IRS employees extends refund issuance to over 21 days in these instances.
Current Year Returns
The IRS prioritizes processing tax returns eligible for refunds before those with tax dues. Payments mailed with the return are separated and deposited upon receipt. Returns with errors necessitating manual review are processed in the order received, with notification through mailed letters.
The IRS issues most refunds within 21 days. However, paper-filing could take four weeks or more. Taxpayers can track refund status using “Where’s My Refund?” online or the automated hotline.
As of July 8, 2023, the IRS had 1.29 million unprocessed amended individual tax returns, with a current timeframe exceeding 20 weeks. Filing the same return multiple times will only add to the backlog, so taxpayers should monitor status updates through “Where’s My Amended Return?”
Payroll Tax Returns
As of July 13, 2023, the IRS had 266,000 unprocessed Forms 941, Employer’s Quarterly Federal Tax Return, being processed in order.
Tax Exempt Applications
Although the IRS is processing applications for tax-exempt status, review wait times can be substantial.
Forms W-7 received in April 2023 are currently being processed in the order received, with a 12-week timeframe. Applicants will be notified of ITIN assignment or any additional information required.
Forms 2848 and 8821
Third-party authorizations (Forms 2848 and 8821) are being processed in the order received, but no specific completion timeframe is available. Submitting these forms through the Tax Pro Account tool is recommended.
Notices: The IRS has resumed issuing most notices, including for collections. Addressing errors or verification requests may take over 120 days depending on taxpayer response and IRS processing.
Phone Service: Telephone support is available for taxpayers and professionals, but peak-time calls may not be immediately answered. Some lines offer a call-back service that is functional.
Taxpayer Assistance Centers (TAC): TACs are open, including previously closed centers. Additional TACs have been announced to improve accessibility.
Taxpayer Advocate Service (TAS): Local TAS phone lines are open to assist with unresolved tax problems causing financial hardship. TAS cannot assist with refund delay requests for suspended tax returns.
Despite the IRS’s progress, certain challenges persist, and taxpayers are encouraged to use online tools and services when possible to streamline processes.