On July 15, the first batch of advance child tax credit monthly payments — worth roughly $15 billion — was sent to about 35 million families. The Treasury and IRS said more than 2.2 million additional stimulus payments totaling $4 billion were disbursed last week under the American Rescue Plan. And nearly 4 million taxpayers who overpaid their taxes on unemployment compensation have been sent refunds that average $1,265.
This is good news for families who have gotten their money, but it also fuels the frustration of others who are struggling and haven’t received their payments. A private Facebook page, created in March, has close to 1,000 members who share stories of failing to receive the third stimulus payment.
A nurse complains about working during the pandemic and still waiting on the coronavirus-related relief.
It’s “7:09 in the AM and it’s already impossible to get through,” someone posted this week after trying to call the IRS.
Many of the comments chronicle fruitless efforts to reach the IRS for answers.
“It’s one excuse after the other,” another Facebook user wrote.
Lisa McGruder and her husband from Pontiac, Ill., didn’t get the $750 July child tax credit payment for their three children, who are 7, 8 and 10. The couple suspects that an amended return is holding things up.
And they are likely right, although no one from the IRS has told them so.
The couple, like so many others, had unemployment income last year. Under the American Rescue Plan, signed into law on March 11, Congress removed the federal taxability of unemployment benefits up to $10,200 for individuals and $20,400 for married couples filing jointly. To help taxpayers, the IRS said it would automatically refund money to people who filed their tax returns reporting unemployment income.
The IRS said there was no need for taxpayers to file an amended return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return.
The IRS has a huge backlog of unprocessed returns. As of July 17, the IRS said it had 15.6 million unprocessed individual returns.
In terms of priority, amended returns fall behind originally filed returns. This, in turn, can delay other payments, including the advance child tax credit payments, because the IRS now has to reconcile the two returns. And although the agency has said it could use people’s 2019 returns to determine eligibility for the monthly child tax credit payments, once the latest return — in this case, the 2020 return — has been processed, that’s the one the IRS uses. If the two 2020 returns — the original and amended documents — are stuck in the processing pipeline for further review, then the agency can’t determine the eligibility for claimed children.
Many families may be seeing a note saying either that they are not eligible or that the child tax credit is pending.
“The IRS continues to work hard to process tax returns and amended returns to ensure that taxpayers receive the correct refund. For taxpayers who qualify for the Advanced Child Tax Credit or Economic Impact Payments after their returns or amended returns are processed, we will automatically make any additional payments,” the agency said in a statement. “The IRS understands the importance of these payments, and we appreciate the patience of taxpayers during this unprecedented period.”
One reader reached out on behalf of her disabled mother, who is waiting for child tax credit payments for three children, 17, 16 and 5. The mother’s amended return was filed and accepted on May 10. The IRS told her it could take 16 weeks to process the return.
“I helped her set up the child tax credit portal, which shows that her status is ‘pending’ and that she will not receive monthly tax credit payments at this time,” the adult daughter emailed. “I am almost positive this is because of the amended return.”
That’s part of the problem with the IRS. It’s not great at communicating to folks why there’s a delay, so people are often left guessing what’s wrong.
“My mother and I have spent countless hours on the phone with the IRS over the past couple weeks, but no one has been able to provide any details on how to get this issue resolved,” the daughter wrote. “My mother could really use the money. It seems that a lot of people are in the same boat. They either amended their returns, or their returns have been in limbo for several months, so their child tax credit advance payment status is also pending.”
In a recent report on how the government is responding to the pandemic, the Government Accountability Office (GAO) specifically pointed to the communication failings at the IRS.
“With significantly more returns currently being held for manual review than in prior years, more taxpayers are trying to get information about the status of their returns and refunds,” the GAO report said. “However, taxpayers have had difficulty obtaining status updates on their refunds from IRS, either by phone or online.”
The GAO also criticized the IRS’s website for not providing enough relevant information regarding delays in processing people’s returns. “Additionally, IRS’s automated message on its toll-free telephone line for individual taxpayers has not been updated to explain refund delays or to include any other alerts associated with the 2021 filing season,” the report said.
When readers reach out to me hoping that I know what’s going on, almost to the person they say they would be less worried if they just knew why their money hasn’t arrived.
The GAO is right. The Treasury and IRS would better serve the public if they truly understood this wisdom from author William H. Whyte: “The great enemy of communication, we find, is the illusion of it.”