IRS Paper Refund Checks Delayed this Filing Season
The IRS delayed many paper refund checks this filing season as it shifts taxpayers toward direct deposit. Taxpayers without valid banking information often received notices requesting direct deposit details.
By William Stromsem, J.D., CPA, George Washington University School of Business
Executive Order 14247 required federal agencies to phase out government payments by paper checks. The purpose was to provide faster, less expensive processing and payments that were less susceptible to theft or fraud. However, the IRS implementation has resulted in longer-than-usual delays for receiving paper check refunds.
Those taxpayers who did not provide direct deposit bank information were significantly delayed because the IRS paused the refund process and sent taxpayer notices asking them to log in to their online accounts to provide direct deposit information or to request a paper check. According to the National Taxpayer Advocate mid-year report to Congress, “As of April 27, the IRS had issued about 4 million notices for returns that either did not include valid direct deposit information or contained incorrect information.” Many taxpayers didn’t have online accounts or weren’t able to respond online, and if they didn’t respond, the IRS sent a paper refund check to the taxpayers six weeks after the date of the notice. This is in addition to the normal delays in postal delivery service that we reported previously.
Late refunds also added to taxpayers' stress. Many individuals called their return preparer, concerned that the return might not have been properly e-filed or mailed, might have been lost, or might have been pulled by the IRS for further review. If they checked their online accounts or the IRS's online “Where’s My Refund” tool, they often found returns that had been accepted and approved for a refund, raising concerns about why they had not yet received a check.
Practitioners should consider advising clients to submit direct deposit information on returns or accept refund delays. Clients may have bank accounts but are reluctant to provide account information to the IRS. Or they may just expect a prompt paper refund, as in the past. Some have privacy concerns or concerns about government intrusiveness, or they may be concerned that the IRS could use bank information to collect taxes due. Practitioners may wish to provide some “education” to clients to dispel any misconceptions and speed refunds.
Topics:
