With just days to go in 2023, taxpayers are already looking ahead to the next year—but some are still waiting on answers related to previous tax years. The IRS acknowledges that the agency continues to experience delays. Here’s a look at where things stand.
The agency says that it has processed all paper and electronic individual returns received before November 2023. Additionally, the agency claims it is opening mail within normal time frames. This means, they say, that all individual returns received for the tax year 2021 or earlier have been processed—if those returns had no errors or did not require further review.
By the numbers, as of Dec. 2, 2023, the agency had 705,000 unprocessed individual returns (Forms 1040). These include tax years 2022 and 2021 returns that need review or correction and late filed prior year returns.
Of the unprocessed individual returns, 700,000 returns require error correction or other special handling, and 105,000 are paper returns waiting to be reviewed and processed. These returns require special handling by an IRS employee, so in these instances, it will take the IRS more than 21 days to issue any related refund.
When it comes to individual tax returns received in the current year, the IRS will process those for which refunds are due first. Tax returns that reflect tax due are processed last—but, of course, the IRS wants to get paid. If a payment is mailed with the tax return, the payment is separated upon receipt and deposited.
MORE FROM FORBES ADVISORTax returns that need to be manually reviewed due to errors will be processed in the order received.
Some returns need a second look. If the IRS needs more information or requires you to verify you sent the return, it will send a letter. That could take more than 120 days, depending on how quickly and accurately you respond and how quickly the agency can process your return.
In most instances, no further action is needed. The IRS will contact you by mail if it need more information or if we made a change to your return. If you filed electronically and received an acknowledgement, you don’t need to take any further action other than promptly responding to any requests for information.
The IRS issues most refunds in less than 21 calendar days. However, if you filed on paper and expect a refund, it could take four weeks or more to process your return. Check Where’s My Refund? for more detailed information. Information is available 24 hours after e-filing a tax year 2022 return, three or four days after e-filing a tax year 2020 or 2021 return, and four weeks after filing a paper return.
You can also call the automated refund hotline, 800-829-1954. Please note that the hotline cannot give you your refund status for any year other than the 2022 tax year. According to the IRS, Where's My Refund? is the only automated source to receive updated information for prior years.
If the IRS needs more information to process your return, it will contact you by mail. Be aware that the IRS is still processing your return or correcting an error, the agency will not be able to provide you with your specific refund date.
If you are due a refund and filed on paper more than six months ago and Where's My Refund? does not indicate that your return has been received, you should resubmit your tax return—electronically if possible. Tax returns must be signed (fresh ink, if on paper) and include all documents submitted with the original return. But if that very specific set of facts does not apply to you, do not file your tax return again. That will confuse the IRS. For information about the processing of your return, check Where's My Refund? or click over to your Online Account for possible updates.
As of Dec. 2, 2023, the IRS had 680,000 unprocessed Forms 1040-X, amended returns. The agency is processing these returns in the order received, and the current timeframe can be more than 20 weeks. With that in mind, don't file the same return more than once—the pile will grow larger. You should check Where's My Amended Return? if you're looking for the status of your refund on an amended return.
As of Dec. 7, 2023, the IRS had 508,000 unprocessed Forms 941, Employer's Quarterly Federal Tax Return. These tax returns are processed in the order received. The IRS reminds taxpayers not to file a second tax return.
As of Dec. 6, 2023, the total inventory of unprocessed Forms 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund, was approximately 1.03 million. Since these returns are for those taxpayers seeking adjustments, some forms cannot be processed until the related 941s are processed.
Form 941 and Form 941-X may include claims for the Employee Retention Credit (ERC). In July, the IRS slowed processing of returns that involve the ERC due to the complexity of the amended returns and the increase in businesses claiming the credit when they are not eligible.
In September of this year, citing "rising concerns about a flood of improper Employee Retention Credit claims," the IRS announced an immediate moratorium on processing new ERC claims. The pause will run through through at least the end of the year—no new claims will be reviewed or processed until early 2024.
That same month, the agency indicated that it believed many of the applications currently filed are likely ineligible for the credit. Later, the IRS announced that certain employers that have filed an ERC claim but have not received a refund can withdraw their submission and avoid future repayment, interest, and penalties.
In December, the IRS announced that it was sending more than 20,000 letters to taxpayers notifying them that their ERC claims have been disallowed. These letters are targeted to taxpayers the IRS believes are not eligible and who have applied for, but have not yet received the credit, and the initial round of letters is being sent as the IRS continues increased scrutiny of ERC claims.
The IRS continues to work claims received before the moratorium but emphasized that processing times will be longer. According to the agency, existing ERC claims will go from a standard processing goal of 90 days to 180 days—and much longer if the claim faces further review or audit.
The IRS is currently processing Forms W-7, Application for IRS Individual Taxpayer Identification Number that were received in November 2023. Those requests are processed in the order they were received. You will be notified once your ITIN is assigned or if the IRS needs additional information. Original identification documents that are submitted with the Form W-7 will be returned at the mailing address of record as quickly as possible, and the associated tax return will then be submitted for processing. Do not file a second Form W-7 or tax return.
The situation is no better for tax-exempt organizations. The IRS receives more than 95,000 applications for tax-exempt status each year. Currently, the IRS is reviewing applications for some forms filed more than six months ago. As of Dec. 4, 2023, here’s the status of those applications:
IRS Tax Exempt Application Status (as of 12/4/2023)
Tax season typically kicks off in late January following the close of the tax year. Our Forbes tax team will provide additional updates as they become available.