Millions of American taxpayers are stranded without federal tax refunds this month because the Internal Revenue Service is struggling with an intersection of technical troubles, staffing shortages, and implementation problems stemming from recent tax code changes.
Delivering Refunds to 18.6 Million Americans With E-File Time? It’s up to IRSThese delays have now stretched into six weeks longer than the usual processing window, adding up to families that must wait weeks more than they had planned for funds already included in their budgets.
18.6 million refunds are affected.Current Processing Timelines and Delay FactorsRefunds are traditionally issued within 21 days for electronically filed returns.
But current processing times are much longer, and some taxpayers are now waiting 42-56 days. The situation is even worse for paper returns which face average processing times now that exceed 12 weeks according to testimony made by IRS Commissioner Martin Sullivan before the House Ways and Means Committee last Thursday.
“We’re dealing with a perfect storm of factors that is causing these extraordinary processing delays,” Sullivan said at one point during the hearing.
“The combination of our modernization efforts, tougher fraud detection protocols, and recent legislative changes is temporarily reducing our capacity to process.”Several specific factors underlie the current backlog:
Issues During the Transition to Legacy Systems: When the IRS sought to modernize its systems over a period of years, new digital processing systems that replaced mainframe computers and paper processing equipment with more efficient methods encountered unforeseen integration issues when connected up to existing databases of familiar data.
These problems first emerged in the middle of March and affected almost 40% of electronically filed returns.
Enhanced Fraud Detection Techniques: In response to last year’s surge in tax fraud, the IRS started framing data more rigorously.
These enhancements have both been good at spotting potential fraud and they have also greatly slowed processing legitimate returns that hold characteristics making them easier targets for investigation.
Shortages of Personnel at Key Processing Centers: Despite recent hiring initiatives, the IRS still has staffing shortfalls at its important processing centers in Oklahoma City, San Francisco, and Kansas City.
Employment in general remains about 22% less than what it should be, according to NTEU. Analysts have identified the following return categories and geographical variations from IRS processing observations.
Although delayed processing impacts taxpayers nationwide due to safety concerns associated with electronic networking in e-filings for example, multiple datasets show these groups of returns are facing particularly slow validation times:
Returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit.
Business deductions of self-employed taxpayers.
Returns with income from more than one state.
First-time filers lacking any prior IRS processing history
Returns with flags for manual review resulting from identity theft protection needs (these are not usually held any longer than 30 days).
In addition, there are geographic variations in processing times. Taxpayers in the Southeast and West on average experience longer delays than those from the Northeast or Midwest.
This regional disparity can be linked back to problems at inbound processing centers.
“The geographic differences reflect to a great extent the service center from which returns are processed,” said Rebecca Martinez, tax policy analyst with the Urban-Brookings Tax Policy Center.
“But we observe that service centers with the most serious staffing problems are precisely where a large percentage of lower-income taxpayers–those who need their refunds now more than any other group–reside.”
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Financial Impact of Delays on Taxpayers
The longer wait for refunds amounts to a significant financial burden on many families.
A recent survey of those who are hanging around for their checks by the National Consumer Law Center found that 68% had already included this money in their household budgets. Among those affected:
42% planned on using the money from a refund to pay off high-interest debts
37% expected to spend necessities like rent or utilities even though they would be; Among those affected:
23% needed money from a refund to meet medical expenses
18 percent planned to use their refunds for educational expenses
Michael Thompson, consumer advocate at the Financial Health Network: “But these aren’t just minor delays – they represent real hardship for families which rely on their refunds to fulfill their financial obligations.
Many households provide the government each year with interest-free loans through overwithholding, only to be hit with protracted delays in getting back what they’ve stashed away at great inconvenience.” IRS Response and Mitigation In order to address the logjam, the IRS has taken a number of measures:
Transferral of 1,200 personnel from other departments at processing centers
Overtime requirements for processing personnel
Momentary cessation of a number of non-essential audit activities
Enlarged capacity at the automated refund hotline for handling more calls
This assistance requires additional documentation and verification. However, it is available to all taxpayers unable to pay in emergencies, whether as a result of natural disaster or through no fault of their own.
“We appreciate how severely these delays can hurt taxpayers,” Sullivan said in an interview. “The backlog has forced us to put all available resources into dealing with it, while also trying to go ahead with normal tax operations.”
What Taxpayers Can Do
For those who have not yet received their refunds, tax professionals suggest the following proactive steps:
· Monitor Refund Status On Time: Use the IRS‘Where‘s My Refund’tool or the mobile app for IRS2Go rather than calling. The phone lines are impossible to get through right now and these digital tools are updated daily, providing the latest information available.
Ensure Return Acceptance: Make sure that your return was actually accepted by the IRS rather than just submitted via tax prep software. Only accepted returns make it into the processing queue.
Look for Correspondence From IRS: Respond promptly to all requests from tax authorities for more information. Such requests can result in further delays of your refund if not attended to immediately.
Seek Help From The Taxpayer Advocate Service: If refund delays are creating severe financial hardship, then you may qualify for expedited assistance through the Taxpayer Advocate Service.
· Adjust Future Withholding: Consider changing tax withholding so that less is taken out of each regular paycheck and more remains in the hands of the taxpayer throughout the year.
“While waiting for delayed refunds is frustrating, taxpayers should avoid drastic measures like taking out high-interest loans against anticipated refunds,” advised tax attorney Jennifer Williams.
“After the 45-day interest-delayed period required by law, the IRS will pay an additional amount to them for their extended wait.”
IRS Tax Refund Delays in May 2025 : June Improvement Expected
By early June, IRS officials expect major speed-up in processing times and the backlog may be cleared by mid-month at the latest Time-line for a comprehensive system patch which is scheduled to begin next week will be a major factor, and continued ramp-up of processing center staff is also on tap.
The agency has pledged to provide a weekly report card on their progress and plans have been announced by the IRS to have a full-scale review of this year’s processing problems in order (originally) to prevent similar episodes during future filing seasons.
