Each January, millions of taxpayers begin the process of filing their taxes for the previous year. Though the deadline is still several months away, many individuals and families that expect to receive a refund rush to file their return so that they can receive a check from the IRS as soon as possible.
This year, however, it appears that
taxpayers may have to wait quite a bit longer to receive their refund than they normally would.
In past years, tax refunds were usually processed in 10 to 14 days. This year, however, the IRS is telling preparers that refunds will be processed in 21 to 75 days. Because of the high incidence of identity theft and more than $7 billion in improper Earned Income Tax Credit (EITC) payments last year (an increase of nearly 38 percent), the IRS is putting in safeguards that will delay the processing of refunds.
It is estimated that 30 percent of EITC refunds will face a 75-day refund cycle. When logging on to “Where’s My Refund” on the IRS website, you will receive only the following information: Return Received, Refund Approved and Refund Sent.
This is a huge change from previous years, and taxpayers who usually file their taxes early to get their refunds can expect to wait.
However, the IRS is expecting that most refunds will be processed in less than 21 days. There will be daily updates to the “Where’s My Refund” site so that taxpayers may view their refund progress.
The big caution the IRS has given is not to expect your refund by a certain date to make major purchases or pay other financial obligations. The IRS has said they will work hard to process the refunds as quickly as possible. However returns that have errors, are incomplete, need further review, are impacted by identity theft or include the Injured Spouse Allocation could take up to 14 weeks to process.
In addition, unless a compromise is reached before the end of 2012, the expiring tax cuts will be another surprise for many taxpayers.
The Tax Withholding Table used by businesses will be issued as soon as Congress reaches a decision on the tax rates for 2013.
Overall, the news from the IRS reflects a need for taxpayer caution regarding refunds. Don’t count it until you have it in hand.
It would be nice if the IRS showed the same type of urgency when it comes to sending money to taxpayers as the agency displays while collecting money from taxpayers. Unfortunately this isn’t the case—and this year, at least, taxpayers can expect to wait for weeks if not months to receive their refund from the IRS.
If you’d like to learn more, or if you’d like help preparing your tax returns, please get in touch with us today!