If you have not received your tax refund, or it arrived late, you are not alone.
For planet Earth, 2020 has been a challenging year. The pandemic that took center stage this year continues to take lives and remains in community spread in the United States. The economy, workers, and business owners continue to adapt on the fly, making the most of stimulus efforts, a new policy of sustained lower interest rates, and occasionally hopeful numbers on the stock exchange. Swept along with the uncertainty is one of the tried and true artifacts of American life—the tax return.
Each year taxpayers count on their tax refund. With changes in federal tax law in recent years, individual tax returns for middle income workers slimmed down, but the tax refund remains anticipated. In 2020, the Internal Revenue Service (IRS) responded quickly to the emergency environment created by COVID-19 by pushing Tax Day back from April 15 to July 15.
After that, things got wild, and some people are just now receiving their tax refund. If your refund was delayed, there are a number of reasons this year, including:
- No one home: Like so many, IRS workers were sent home. While some were able to work remotely, many were not. This not only delayed tax refunds, but stalled taxpayers with questions who were working hard not to file a false income tax return.
- Information overload: Time away caused a backlog. Combine that with a limited workforce as noted above, and you have delays. The IRS was also the frontline for delivery of stimulus checks authorized under the CARES Act earlier in the year.
- Fine print: In any year, the IRS utilizes algorithms to identify potential errors and inconsistencies in returns. A change of address or bank account, or one wrong digit can send a return into a queue to be addressed by a real human. Even with no error at all—a return can be flagged for review, and may ultimately become fodder for an IRS tax audit.
In an unusual move, the IRS paid interest on individual 2019 tax refunds filed by July 15. For those who experienced delays in their refund—or are still waiting—the IRS paid five percent per year, compounded daily in to the second quarter. For the third quarter ending on September 30, the rate is three percent. By mid-August, almost 14 million taxpayers had received separate interest payments on their delayed refund. The average amount of interest paid was $18.00.
Those interest payments are taxable and anyone who received a payment over $10 should expect to receive a reporting form from the IRS. Even in 2020, some things never change.
Are you facing a tax controversy? Speak with a skilled tax attorney today
Serving local and international clients from offices in Chicago and Cleveland, our experienced tax lawyers at Robert J. Fedor, Esq., LLC help you respond strategically to questions about offshore tax investment or allegations of tax crime. Call 800-579-0997 or contact us today.