Still Waiting . . .

Yesterday, we found out that after 15 months, there could be another 12 weeks of waiting.

Not for Christmas, but it may as well be till then. 

We're waiting a refund on our 2020 US federal tax return, not the 2021 filing.

In a mid-April post, I noted that many other 2020 on-time taxpayers (like ourselves) were also still waiting. IRS officials blamed the pandemic as offices shut down and employees worked from home. 

Of course, that's the way bureaucracy works. 

A delayed tax refund can be taking longer for the IRS to process because it requires additional review. Reasons include incomplete filing status or missing information.

Refund delays were among the top 10 serious taxpayer complaints in 2020 and the IRS flagged 5.2 million tax refunds for fraud, a nearly 50% increase over 2019, according to the Taxpayer Advocate Service. Of those, about 1.9 million were tagged for identity screening. In 2019, 63% of the refunds vetted for identity theft turned out to be legit, according to the organization.

The IRS scans returns for possible fraud. If a return is flagged suspicious, the agency will pull it for more review. A taxpayer is sent a letter (5071C or 6331C letter, Potential Identity Theft During Original Processing with Online Option) if it suspects ID theft or foul play. The IRS doesn't process a tax return or issue a refund until there's a response.

At times, the IRS sends ID verification letters to taxpayers after receiving an e-filed/paper-filed tax return, before processing a refund. This is to randomly verify identification as a measure to prevent identity theft and to test and strengthen IRS internal controls.

That's the way it's supposed to work.

Here's how it didn't work. We never received any letter requesting ID verification or an alert of possible fraud with our return.

What we received last summer was an IRS letter requesting additional information. It was referred to the CPA firm that prepared our return. We received assurances it would be addressed and had no reason to doubt that. Later, we were informed of a data breach and a ransomware demand and a letter noted this could affect IRS information. There's no way of knowing if or not this was a contributing factor to the red flag, but now we're wondering ???

The IRS has a website and under Where's My Refund, taxpayers can supposedly answer question to track their refund. Grenville tried it and, at first, received a message, that the return was still processing. As months went on, re-trys produced a message that his ID info was not recognized. The process was difficult — phone lines were clogged and online authentication was unavailable. He wasn't able to verify his identity online and couldn’t reach a phone representative due to a high volume of calls into the agency. 

How Grenville describes me, at times

Enough is enough, this refund was no small change ($3,300). We could use it much better then the IRS — and it was ours. Months had gone by with nothing happening — no info was forthcoming anywhere, certainly not from the IRS.

The term dog with a bone applies here. By definition it applies to someone who's stubborn, tenacious, persistent, relentless and dogged.

In this case, that would be me.

Holding on and on

I called every IRS number possible with the same result. After a series of questions and keypad responses, the line went to a busy signal or was disconnected, every time, no matter what time of day a call was made.

After finding there was an IRS office here in Nashua, NH, where appointments could be made and there was a listed phone number — that number was called too — same results

Until late Tuesday afternoon when, after going through the keypad queries, a recorded message came on and announced: your wait time is between 15 and 30 minutes, please continue to hold.

You bet I held on, despite that we were meeting friends to attend an outdoor concert. This was at 4 pm and we were scheduled to meet-up with friends at 5:30 pm in a local park. (Yes, we made it for the Neil Diamond tribute band show, not nearly as good as the prior week's Beatles Tribute band show. Both were part of the city of Nashua's SummerFun.)

It wasn't until 4:45 pm that a human voice came on and proceeded to ask us a series of questions, such as social security numbers, date of birth, filing status, address. Other questions pertained to our filed 2020 return. We had all the answers (and more if needed).

Our admission ticket for the local IRS

Then, came a final question—would we like wanted to make an appointment at the Nashua IRS office?

Hmmm, let us think a second (or less). 

Duh, of course, we wanted to do that! 

Not only that but we could get one for the next day as early as 8:30 a.m., we opted for 10 a.m. which gave us time to stop into the CPA's office to advise them of the meeting. We were given copies of info previously sent to the IRS in July.

As well prepared as possible, It was onto our Wed appointment and the chance to speak to an IRS agent in person. We brought assorted documentation: social security cards, drivers licenses for ID purposes, and out 2020 return.

What did we find out?

According to the IRS agent when the additional information was requested and sent in July, it apparently did not get connected with the previously filed return. The agent explained that the information took separate paths and our filed return was marked as potential fraud. Again, no notification was sent to us, which he found puzzling as well. Thankfully, the agent was helpful, more than informative and even apologetic for the long delay.

And, never the twain shall meet, which, in our case, meant the return was in limbo. If we not doggedly pursued a follow-up, the agent could not predict how long it would have remained there without intervention. He suspected it could have been indefinitely—just saying, YIKES!

What happens next?

More waiting — up to 12 weeks, as the agent explained he had reset the process so it could be sooner. However, we were cautioned not to contact IRS shy of the 12 week waiting time.

Up to 12 possible weeks

Good news is that if the IRS doesn't issue a due refund within 45 days after receiving a return, it's required to start paying interest on the refund amount. The 45-days starts on either the day that the return was due, or when a processible tax return was received by the IRS, whichever is later. While the IRS ultimately issues the refund (with interest), taxpayers can wait months. About 18% of refunds flagged for ID verification took longer than 120 days.

Bad news is that any IRS interest you receive with your refund will be taxable income, much like  interest earned from a checking or savings account. 

It's back to the waiting game, but at least now, we're back in the game. 

If something happens sooner, you all will be the second to know, after ourselves.

This was a longer-than-expected post, but helpful to vent our frustration. While we are a fairly patient couple, not being able to reach someone to speak with had become more than extremely frustrating. Finding out that the 2020 return had been flagged as possible fraud with no notification was really unsettling, especially as there are countless numbers of US taxpayers still awaiting refunds, perhaps for similar reasons.