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Still waiting on a tax refund from 2021? The IRS has good news for you

The Internal Revenue Service says it is days away from a “major milestone” in its marathon slog through a backlog of pending tax returns.

By Friday, the tax agency expects it will not have any more “original” tax returns received in 2021 left to process.

That means all taxpayers who sent in income tax returns last year (that don’t need number fixes or extra information) should finally have their return working through the system — and a tax refund coming at long last if they overpaid on taxes. The IRS went into the 2022 filing season with roughly 8 million unprocessed returns received in 2021, according to a Treasury Department official.

By earlier this month, the agency still needed to push through roughly 200,000 individual paper returns received last year. By June 10, the IRS said it had processed more than 4.5 million of 4.7 million paper individual returns. Paper returns for businesses that were filed last year should be wrapped up soon too, the IRS said.

“Completing the individual returns filed last year with no errors is a major milestone, but there is still work to do,” IRS Commissioner Charles Rettig said. He’s previously said he thinks his agency can get current and in a good place on returns and correspondence by the end of 2022.

The IRS got behind the eight ball owing to factors including temporary IRS office closures early in the pandemic coupled with layers of extra work from three rounds of stimulus checks, child tax credit advance payments and mid-season tax code changes.

People calling for more IRS funding said the predicament highlights the resource-strapped agency’s need for more staff and more money. “Long-term and consistent funding for the agency is critical to ensuring the IRS is prepared for future tax seasons,” Rettig said Tuesday.

The IRS has been reassigning staff and hiring newcomers to clear the backlog. In a bid to bring on 5,000 extra workers this year, the IRS has already extended 3,000 job offers and is onboarding 1,500 people, Rettig and Wally Adeyemo, deputy Treasury secretary, said in a letter to Sen. Ron Wyden. The senator from Oregon chairs the Senate Finance Committee.

Make no mistake, the backlog isn’t beat for now. The agency still has amended returns to process, plus more paper returns filed in the 2022 tax season as well the returns still to come in from taxpayers who filed an extension this season.

By June 10, there were 360,000 tax returns in need of correction, according to the IRS. That’s in contrast to the 8.9 million returns awaiting “error resolution” at the same point last year, the agency said.

Taxpayers who got an extension have until Oct. 17 to send in their return. The IRS continues to advise that the quickest way to file a return and get any refund payment is by filing electronically, using direct deposit and double checking to make sure there are no errors in the return. Electronic returns without mistakes have been moving quickly, according to Rettig and Adeyemo’s letter, moving through processing between eight and 21 days.

The IRS noted it’s been trying to plow through the backlog pile while processing this year’s tax returns at the same time.

So far, the IRS says it has processed more than 143 million returns and issued over 98 million refunds worth a combined $298 billion. The agency has previously said it’s planning to receive more than 160 million individual returns this year.

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