San Francisco Tax Preparation / CPA: IRS Addresses Common Tax Refund Myths

Filed in CCH NEWS FEED by on August 11, 2020

The IRS has addressed various myths regarding tax refunds, and reminded taxpayers that there is no secret way to find out when a refund will be issued. The IRS also commented on processing delays for paper tax returns.

Common refund myths that are circulating and misinforming taxpayers include the following:

  • Getting a refund this year means there’s no need to adjust withholding for 2020: Adjusting tax withholding with an employer can help ensure that neither too much nor too little tax is withheld from an employee’s paycheck. The IRS’s Tax Withholding Estimator helps taxpayers figure out the right amount.
  • Calling the IRS or a tax professional will provide a better refund date: The IRS assistors and tax professionals cannot move up a refund date nor do they have access to any “special” information that will provide a more accurate refund date.
  • Ordering a tax transcript is a secret way to get a refund date: This does not accelerate the issue date of a refund.
  • The “Where’s My Refund?” tool is wrong because there’s no deposit date yet: When “Where’s My Refund?” shows the tax return status is received, it means that the IRS has received and is processing the tax return.

Some tax returns may take longer to process than others and need further review. This includes when a return:

  • has errors;
  • is incomplete;
  • is affected by identity theft or fraud; or
  • includes a Form 8379, Injured Spouse Allocation, which could take up to 14 weeks to process.

Moreover, situations that could decrease a tax refund include math errors or mistakes, owed federal or state taxes, child support, student loans or other federal non-tax obligations. Some taxpayers may also receive a letter from the Department of Treasury’s Bureau of the Fiscal Service if their refund was reduced to offset certain financial obligations. Taxpayers can also call the IRS’s automated refund hotline at 800-829-1954, which uses the same information as “Where’s My Refund?”. However, there is no need to call the IRS unless “Where’s My Refund?” says to do so.

Paper Return Processing Delays
The IRS also mentioned that it continues to process electronic and paper tax returns, issue refunds, and accept payments, but noted that it is experiencing delays in processing paper tax returns due to limited staffing, and that this is causing refund delays. Paper returns are being processing by the Service in the order in which they are received. The IRS reminded taxpayers who filed a paper return that they should not file the same tax return again or call the IRS.

Further, the IRS pointed out that interest on individual 2019 refunds reflected on returns filed by July 15, 2020, will generally be paid from April 15, 2020, until the date of the refund. Interest payments may be received separately from the refund, and are considered taxable income in the year received.

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