IRS Backlogs Cause Delays Across the Board

Large IRS backlogs are impacting taxpayers and have held up the processing of tax returns, tax payments, and refunds.

Updated September 29, 2021

The IRS backlog is causing delays for taxpayers. When COVID-19 hit, the IRS had to shut down their offices — but the letters and checks were still coming in, causing the agency to build up a huge backlog: millions of pieces of unopened mail and unprocessed returns.

Many checks from taxpayers sit unopened, resulting in refunds that never arrived. The delays are so bad, they’re even affecting people who bypassed the mail and paid their taxes online.

The IRS has stated that paper returns will be processed in the order received. Taxpayers are asked to NOT file a second tax return or contact the IRS about the status of their return. 

Due to the extended July 15th tax filing due date, the IRS is still processing returns received over the summer. As the return is processed, it may be delayed because it has a mistake, is missing information, or there is suspected identity theft or fraud.

You’ll receive any replies to letters and notices directly from the IRS but, until then, the best way to find answers to questions about individual returns or check on your refund, tax payment or Economic Impact payment, is through the IRS website. 

Other than responding to any requests for information promptly, there’s no action you can take. 

IRS.gov remains the best source for questions about tax law, checks on refund status, tax payments, and Economic Impact payments. The IRS has also released an FAQ about the delays here.

The exact timeframe of delays varies depending on the type of issue and the state.

Noteworthy State-Specific Delays

California

In California, formations are currently taking 2-3 weeks, much longer than the 5 days they were at previously. Amendments are taking 3-4 weeks to process.

Unfortunately, California has suspended state expedite services, so all filings are subject to the same process.

Delaware

In Delaware, the standard processing time is quoted at 7 days, but is actually closer to 2 weeks. Filings submitted with the state expedite fee are unaffected.

Florida

Florida has amendments currently taking about 5 weeks, while new entities submitted online take about 2 weeks. Florida does post their current processing time and does not offer state expedite services.

Hawaii

In Hawaii, filings submitted by paper are taking about one month. Online filings still take about 2 weeks, and there is a state expedite option available online, which usually takes less than 48 hours. This option is not available for paper filings.

Illinois

Illinois delays are not exactly due to Coronavirus or anything, but filings submitted by mail take 6-8 weeks. This does affect new entities that have another entity listed on the articles. Due to Illinois restrictions, these must be submitted by paper, and cannot be expedited.

New York

New York mailed filings are taking about 2 months. However, filings submitted online are unaffected.

Other States

All the rest of the states have stayed relatively close to their regular processing times.

IRS Processing Times & EINs

For items that are faxed to the IRS, the return time is generally 3 months. For election forms like Form 8832 & 2553, this time is negligible because the change will be made effective as of the date indicated on the form, not the date the IRS accepts it. 

For new entities trying to get their EIN, however, this delay can be a huge problem. Generally, we can pull new EINs online, which are immediate, but sometimes an EIN cannot be pulled online, and they instead must submit the request via fax. This is where that delay comes in. 

The main reason an EIN would not be able to be pulled online is that another entity with the same name pulled their EIN online previously. The IRS filters are not very dynamic; they just reject anything with the same name, even if it is organized in a different state.

The best way to prevent a delay with the IRS when pulling an EIN is to pick a unique entity name that has not been used by anyone else. Some examples of names that are NOT likely to have been used by someone in the past are names that include a property address, and names that include words you don’t see in entity names often.

The Takeaway

If you attempt to call the IRS, be advised that wait times are exceedingly long and it can be very difficult to get through to a person. However, the IRS has electronic tools for individuals to view their tax accounts, get a tax transcript, or check the status of their refunds at https://irs.gov/individuals.

If you sent the IRS a check and it has not yet been cashed, do not stop payment. When the IRS eventually gets to your piece of mail, they will process your check. The payment will be considered paid on the date the IRS received it.

There’s not much anyone can do about the IRS backlog and the resulting delays. The most important thing you can do is to keep an eye out for any communications from the IRS, and respond to any requests for information promptly to avoid further delays.

As always, take advantage of our free educational content and every other Tuesday we have Toby’s Tax Tuesday, another great educational series. Our Structure Implementation Series answers your questions about how to structure your business entities to protect you and your assets. One of my favorites as well is our Infinity Investing Workshop.

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