Where’s Your Tax Refund? | U.S. GAO
Each tax filing season is a large-scale, critical operation during which the Internal Revenue Service (IRS) processes more than 150 million individual and business tax returns, issues hundreds of billions of dollars in refunds, and provides customer service to tens of millions of taxpayers.
In the past few years, taxpayers have experienced delays in getting tax refunds as the IRS was challenged during the pandemic—for example, by staffing shortages as well as an increased workload as it processed COVID-related economic relief checks.
In today’s WatchBlog post, we’ll look at “Where’s My Refund”—an online tool meant to provide taxpayers with updates on their filing and refund status. ”Where’s My Refund” has seen a boom in visits, but many say it’s not helpful. We’ll also look at some of the challenges IRS faced during the 2021 tax season.
Also, check out our video below, highlighting the recent Congressional testimony of GAO’s Jessica Lucas-Judy (a tax expert) on delays at IRS.
Where’s My Refund?
“Where’s My Refund” is a publicly available online tool run by the IRS where taxpayers can get updates on their refund status.
During the last two tax filing seasons (2020 and 2021) many taxpayers have seen delays in getting their filings processed. As a result, “Where’s My Refund” saw a 71% increase in visits in 2021 when compared to 2019 (before the pandemic). From January to mid-May 2021, it received 1.4 billion visits.
But despite the volume of visits, many who used the site said it was not helpful.
- Limited information. “Where’s My Refund” provides users with three statuses: (1) tax return received, (2) refund approved, or (3) refund sent. But it doesn’t always provide an update if a return’s processing is delayed or even suspended due to an error or other reason. During the 2021 filing season, millions of taxpayers’ returns were delayed for a manual review because of such errors.
- User satisfaction. IRS conducts user satisfaction surveys on “Where’s My Refund” to gain information on how helpful the application is. In 2018, 55% of taxpayers who used the tool and responded to the survey said the tool was helpful. That declined in 2021 to about 24%.
What can IRS do to fix it? In our new report, we found that while IRS knows there are problems with “Where’s My Refund” they do not have plans to modernize it.
IRS officials told us they planned to make some simple changes to the tool before the 2022 filing season started. These include adding general, static messages on the “Where’s My Refund” status page so that taxpayers are aware of possible circumstances where their refund may be delayed, similar to the information IRS currently provides on processing delays on its website. However, these messages do not provide detailed information to taxpayers, who may continue to call or write IRS about their specific situation.
IRS officials told us that only simple changes such as this were possible, and modernizing “Where’s My Refund” would be challenging because of its age. This tool is nearly 20 years old and the last time the IRS made changes to it that the taxpayers could see was 2013. IRS officials also told us they don’t have the resources and funding to modernize the tool.
However, in our report, we recommended that IRS work with the Department of the Treasury to modernize “Where’s My Refund” so that the website fully addresses taxpayer needs. This would improve service and wait times for taxpayers and reduce telephone calls and correspondence to IRS.
Refund delays could mean you get paid interest
IRS may owe you interest on your refund if it takes too long to pay you. There are many other reasons why IRS may pay interest on a refund—such as a court ruling or a change in law allowing you to claim benefits going back several years. During the pandemic, IRS postponed the filing season deadline in 2020 and 2021, which meant IRS paid interest on more refunds.
Not all of the increase in interest was due to the pandemic, however. Interest payments had been rising in the years prior. In the past 7 years, IRS has paid nearly $14 billion in interest on refunds. IRS does not keep track of why it pays interest to taxpayers, nor does it report this information to the public or congress. We recommended that IRS do so, and take steps to reduce interest payments where it can.
IRS has experienced several challenges in recent years, including difficulty hiring workers to process returns, implementing notable tax law changes, and—more recently—managing the 2020 and 2021 filing seasons during the pandemic.
We’ve previously blogged about the impacts COVID-19 has had on the IRS, including the closure of tax processing centers during the early days of the pandemic, as well as longer-term efforts by IRS to move from paper-based to more digital processes. These impacts have contributed to the large backlog of millions of unprocessed returns.
As a result of these challenges, taxpayers also struggled to get help from IRS’s other customer service outlets, such as hotlines and written correspondence. Taxpayers reported longer wait times and other delays, due, in-part, to the volume of telephone calls and correspondence that IRS received.
Taxpayers Struggled to Get Help from IRS during the 2021 filing season
Find out more about our work on the 2021 filing season, including our audit of “Where’s My Refund,” by checking out our new report.