Are you a business owner who is waiting for a refund from your 2020 income tax return or you filed for the Employee Retention Tax Credit and haven’t yet had a response? According to the US Treasury Department as reported by CNBC, there is a backlog of nearly 8 million paper-filed business tax returns for 2020. I have seen previous notices from the IRS stating they are 3-6 months behind in processing forms. Now we know the amount of forms still to be processed.
The delays are largely a result of “unprecedented and drastic actions” due to the COVID-19 pandemic and the IRS took necessary actions to protect employees which included shutting tax processing centers and other offices nationwide in early April and extending the federal income-tax filing deadline to July 15.
Employment tax returns are much of the backlog with nearly 5.5 million which were awaiting processing at the end of 2020, according to the watchdog report. Delays also affected business tax returns for partnerships, corporations, estates and gifts, fiduciaries and tax-exempt organizations.
According to a letter written by Kenneth Corbin, commissioner of the IRS wage and investment division, the business tax return backlog has declined significantly, to 291,000 as of July 2021.
The IRS states it has expanded its telework operations, hired about 3,500 new employees in processing operations and transshipped more than 2.3 million returns, forms and documents between processing centers to balance inventories and prevent bottlenecks, he said.
The agency also offered incentive pay and overtime for employees, according to the report.
However, according to the report, the IRS continues to have difficulty hiring enough staff to continue processing tax-year 2020 returns. The agency had met 63% of its recruitment goal for processing operations as of July, Corbin said.
“The inability of the IRS to hire sufficient staff will affect taxpayers awaiting refunds or that have claimed pandemic business credits,” the report said.
So, what does this mean for you? If you are waiting for a tax refund, you may have to be patient a while longer before it’s been processed and it’s received. But don’t allow the long wait keep you from filing for the Employee Retention Tax Credit if you qualify. The amount you may be entitled to can be up to $7000 per employee per quarter for 2021 (and up to $5000 per employee for the year 2020.) If you need assistance, we are here to help! We offer consultations to teach you how to determine your figures and file the claim for the credit, or we can do the returns for you as well. Reach out to us at 310-534-5577 or email@example.com to discuss your specific needs.