The Internal Revenue Service (IRS) began accepting and processing 2021 tax returns on Monday, but the agency warned taxpayers weeks before about the possibility of more delays after last year’s difficult tax season.
With tax season underway, the IRS is urging people to file their returns electronically. Google search trends also show that people are looking to find how long it’s taking the IRS to process mailed paper tax returns.
THE QUESTION
Are you more likely to receive your refund faster if you file your 2021 tax return electronically?
THE SOURCES
THE ANSWER
Yes, you are more likely to receive your refund faster if you file your 2021 tax return electronically.
WHAT WE FOUND
The expected delays in processing tax returns and issuing refunds aren’t a new phenomenon for the IRS. The IRS was behind before the 2021 filing season started because it carried over more than 11 million returns from 2020, according to a report released earlier in January by National Taxpayer Advocate Erin Collins, an independent ombudsman within the U.S. Department of the Treasury. She added the IRS had not processed almost all 2019 tax returns until June 2021.
Collins’ office points to multiple factors for the slowdown in processing tax returns, such as Congress requiring the IRS to divert resources to process stimulus checks and COVID-19-related issues.
In a news release about the start of this year’s tax season, IRS Commissioner Chuck Rettig said taxpayers should file their returns “electronically with direct deposit if at all possible,” adding that filing a paper 2021 tax return “means an extended refund delay.”
TurboTax, a tax preparation service, also said in a 2021 blog post that taxpayers will receive their refunds faster if they file electronically. TurboTax wrote in October that taxpayers who send in paper returns by mail can expect to wait up to six weeks for their refund. Filing electronically and opting for direct deposit is the fastest way for people to get their refund.
Keystone CPAs, a firm specializing in business accounting and taxes, wrote on its Facebook page that taxpayers who file a “complete and accurate” tax return by mail can expect their refund in about six to eight weeks from the date that the IRS receives it. Those who file their return electronically should see their refund “in about half the time,” the firm said.
Soon after last year’s tax filing deadline, Collins also found that it took about three weeks for the IRS to process the average electronic return and six weeks to process a paper return.
In her report, Collins called 2021 “the most challenging year taxpayers and tax professionals have ever experienced.” The advocate’s office found in some cases that it took the IRS weeks just to open an envelope containing a paper return, and it took up to six to eight months to issue a refund from one.
The IRS also closed the 2021 filing season with tens of millions of tax returns that had been flagged for errors, with some related to Recovery Rebate Credit claims for people who did not receive their expected stimulus amount. In many cases, refunds were delayed for months as the IRS waited for taxpayers to respond to the error notices in writing.
When releasing the report, Collins said paper is the “IRS’s Kryptonite,” adding that the agency “is still buried in it.” As of late December 2021, the IRS still had backlogs of millions of unprocessed tax returns.
There are several ways for taxpayers to file electronically in 2022: through software, a tax professional or the Free File tool on the IRS website. Those who had an Adjusted Gross Income (AGI) of $73,000 or less in 2021 can use Free File to prepare and file their federal income taxes free of charge. Free electronic forms that a taxpayer can fill out and file themselves are available for those who made more than $73,000 in 2021.
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