Here's What You Need to Remember: According to the National Taxpayer Advocate, “this filing season was the quintessential definition of a perfect storm—a particularly bad or critical state of affairs, arising from several negative and unpredictable factors—resulting in tens of millions of taxpayers experiencing hardship and uncertainty in trying to reach a live assistor.

It has, unfortunately, been the same old story for the Internal Revenue Service and the Treasury Department, which have for months have been struggling to keep up with their ongoing responsibilities to promptly issue the various government-issued payments to eligible Americans.

Do take note that just a few weeks ago, the agencies were able to disburse a sizeable batch of 1.5 million refunds averaging $1,686 from 2020 unemployment benefits—and more checks are slated to head out to Americans this month. 

These particular refunds are due to President Joe Biden’s $1.9 trillion American Rescue Plan, which was able to waive federal tax on up to $10,200 of unemployment benefits, or $20,400 for married couples filing jointly, that were received by taxpayers last year. Unemployment benefits are generally treated as taxable income, according to the tax agency.

The IRS has noted that since May, it has issued in total nearly nine million unemployment refunds with a value of more than $10 billion.

“The IRS will continue reviewing and adjusting tax returns in this category this summer,” the tax agency said in a release. “The IRS continues to review the simplest returns and then turns to more complex returns.”

Refunds Sent Out Automatically

In order to receive the refunds, for most Americans, there is no action needed on their part. The IRS has confirmed that it will automatically adjust tax returns if individuals are indeed eligible for any cash refund.

“Because the [approval of the refund] occurred after some people filed their taxes, the IRS will take steps in the spring and summer to make the appropriate change to their return, which may result in a refund,” the agency states.

In addition, “taxpayers will receive letters from the IRS, generally within thirty days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.”

IRS Overwhelmed

Do understand that throughout the past several months, the IRS has worked around the clock to issue tens of millions of $1,400 stimulus checks, the monthly expanded child tax credits, and “plus-up” payments—not to mention the traditional refunds from federal tax returns.

Because of the ongoing coronavirus pandemic and staff shortages, the agency has reported that it still has more than thirty-five million individual and business tax returns to process—a massive backlog that is believed to be four times larger compared to the end of the 2019 filing season.

According to the National Taxpayer Advocate, “this filing season was the quintessential definition of a perfect storm—a particularly bad or critical state of affairs, arising from several negative and unpredictable factors—resulting in tens of millions of taxpayers experiencing hardship and uncertainty in trying to reach a live assistor. … In the coming months, the IRS must work through its backlog of tax returns and be current in processing its correspondence while focusing on rebuilding itself to become a more efficient and taxpayer-centric organization.”

Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn. This article is being republished due to reader interest.

Image: Reuters