Americans should avoid filing paper tax returns amid backlog, IRS says


The IRS urged Americans to file their taxes electronically this year as the agency deals with a backlog of nearly 7 million unprocessed paper returns from last year.

On Friday, the IRS announced that it was delaying the start of the 2021 tax season, which usually begins at the end of January, to Feb. 12 to prevent further backlogs.

“If filing season were opened without the correct programming in place, then there could be a delay in issuing refunds to taxpayers,” the IRS said in a news release.

The IRS received about 16 million paper returns last year; as of Dec. 25, the agency said it still had about 6.9 million individuals returns in the “processing pipeline” — or about 40%.

The delay means that people who claim Earned Income Tax Credit or Additional Child Tax Credit won’t receive their refunds until the beginning of March, so long as they file electronically with direct deposits and there are no issues with their tax returns, the IRS said.

The agency said it expects nine out of 10 taxpayers to receive their refund within 21 days of filing electronically.

“Given the pandemic, this is one of the nation’s most important filing seasons ever,” IRS Commissioner Charles Rettig said in a statement. “This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible.”

While the delay is potentially inconvenient for Americans still reeling financially from the crisis, the IRS is paying interest on the overdue refunds. Taxpayers with a refund issue date between April 15 and June 30 earn an annual interest rate of 5%, while refunds issued between July 1 and Sept. 30 earn an annual interest rate of 3%, the IRS said…Read more>>