The tax season has not gone according to plan but for many there is light at the end of the tunnel. The IRS went into overdrive the past week and is quickly catching up on their back log. Many filers were seeing their returns delayed with little to no explanation. Tempers began to boil over and frustration bursted out. Fortunate for many is things got a whole lot better over the weekend.
Code 1541 has changed for many
Where's my refund on the IRS webpage for hundreds of thousands to millions of filers was stuck on "Take Action" with a link to another page that provided the code 1541. Anyone who called the IRS including the media were given different answers each time they called about the code. But for most it ended up being a part of the PATH Act and changed once their tax return was finally processed.
The IRS began the year already a little behind with amendments from last year and once the government shutdown began they quickly got further behind. The agency tried to push the belief that even though the government was partially shutdown returns were going to be processed, kind of. Approximately 70,000 workers were furloughed at the agency and only a handful were required to remain at work to perform essential roles and even less were available to process returns.
A big ol' mess with little facts
Filers began submitting their returns in early January during the shutdown and most have seen their returns delayed in some way. The only way filers could actually find out what was going on was by acquiring their tax transcript through the IRS that showed the progress on their return. Upon looking many found the code 570 which meant a "delay" and the code 971 which meant a "notice had been issued." Calling the IRS did little good to understand what was going on because each explanation was different from another.
Some IRS representatives stated the code 570 referred to a return being delayed due to the PATH Act while other representatives made varying statements saying it was due to wage or ID verifications. When questioned about the code 971 and notices being issued most stated it was a generic letter informing a filer that there was a delay in processing their return.
Finally an answer
Friday, February 22 things quickly changed and those who checked their tax transcript saw that the code 570 was followed by a code 571 that stated the "issue had been resolved" and their return had been processed. As they read further down the transcript they saw a code 846 with the words "refunded issued." Most refund dates have been stated to be for Wednesday, February 27.
Many are now asking, what the heck happened? The answer is simple, the IRS was actually just a bit behind and needed a little time to catch up. The IRS has 21 days from the accepted date to process and refund a return or delay it some way for one of several reasons that aren't publicly known. By finding a reason to delay returns, even if the cause was a backlog, the IRS was able to avoid refunds accruing interest and paying out more than necessary.
Its estimated that over a million filers were delayed which would have cost the IRS millions more in interest. In the end the IRS just needed a little more time to get things straightened out and the rollercoaster of emotions many felt might have not been needed at all. "Sometimes it's just better to have patience," one filer said. "We tend to jump to conclusions without really knowing anything."
Most refunds have been issued as of reporting including recipients who received the Earned Income Tax Credits and Additional Child Tax Credits.