A recent study shows that the IRS is on track to pay you for delayed tax refunds by 2022. The agency is spending billions of dollars a year on interest on delayed returns. The last time it increased interest rates was April. As of May 6, the agency still had 1.7 million paper tax returns to process. The reason? The backlog of millions of tax returns. The interest rates are tied to the benchmark interest rate of the Federal Reserve.
In the meantime, the IRS continues to receive far more returns than it did last year. In fact, the government is now processing far more than 10 million tax returns every year. The agency also receives recovery rebate credits and stimulus payments, which it manually reviews. In addition, if your tax return is delayed by two months, the IRS will begin paying you interest on the delinquent refunds by 2022.
In March of 2022, the IRS issued a news release and proposed regulations that set aside a section of the Code known as the "unified plan rule" for multiple employer plans. This new regulation also updated the rules for generating substitutes for Form 941. This change may have a significant impact on how many people are waiting for their tax refunds. But don't worry: the IRS is still making progress! In fact, there are more than 1.5 billion unclaimed tax refunds that could be paid.
The IRS claims to issue most tax refunds within 21 days. But if you don't file electronically or did an error, it can take longer. If you did not set up direct deposit, the IRS might not send you a paper check until May 9, 2022. In addition, the process may take six to eight weeks to process a mail-in return. If you're unsure when your refund will arrive, check out the Where's My Refund site.
If you are due a refund in April or May, it's time to file your return now! Even if you've missed the April 18 tax filing deadline, you still have time to file your return and avoid tax penalties. If you have an EITC or some other form of credit you've earned, your refund should be issued before February 15 at the latest. If not, make sure you file your return early.
The interest rate will be 5% per year, compounded daily, starting July 1, 2022. This interest rate will be applied to any refunds that take 45 days or more to process. This rule also applies to information returns, which are not tax returns, but are submitted by third-party payers. The taxpayer will not incur any penalties as a result of this action. It is not clear if this measure will be effective for 2022 tax returns.
The Internal Revenue Service will continue to hire new employees for 5,000 positions in its service processing centers. These centers are located in Texas, Kansas City, and Ogden, Utah. You can apply for these positions in person, online, or at an IRS hiring event in your area. You can expect to work for 30 to 45 days after the interview. However, you should remember that the backlog of tax returns is still huge.
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