The IRS stopped processing paper returns at the end of March as it began adjusting operations in order to keep employees safe and to comply with coronavirus-related social distancing and stay-at-home guidelines.
National Taxpayer Advocate Erin Collins recently confirmed that many taxpayers face “extreme delays” in receiving those checks.
According to Collins, the IRS had 20 million pieces of unopened mail as of May 16 – about half of which were paper returns. The agency estimated it had a backlog of about 4.7 million paper returns at that time, and taxpayers have until July 15 to file.
The agency had only processed about 2.7 million paper returns as of May 22.
However, IRS Commissioner Charles Rettig said during congressional testimony June 30 that chipping away at that backlog is a priority for the agency.
“The paper returns are a high priority for the Internal Revenue Service in terms of processing, and I think we’re running through that about 1 million a week – reducing the backlog about a million a week,” Rettig told lawmakers.
Rettig also noted that electronically filed returns that were mistakenly flagged by the IRS filtering software are also a priority since these checks were delayed as well.
Once the returns are processed, the IRS typically issues refunds electronically within 21 days. In the regular mail, they can take up to six weeks.
About 8,300 people are working on refund-related activities at the IRS, according to the commissioner.
However, the silver lining for people whose refunds have been delayed is that it could result in an additional payment from the IRS. The tax agency said it would pay interest on individual 2019 refunds for returns filed by July 15 – the delayed tax deadline. Interest will “generally be paid from April 15, 2020 until the date of the refund,” the IRS said.
Interest payments might be received separately from the refund itself.