ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – COMMON MYTHS ABOUT YOUR TAX REFUND
By Robert S. Schriebman
Taxation is rarely if ever an enjoyable process. But if there is one ray of sunlight, it’s getting a refund. There are many emotions involved in getting your refund. There is a child-like excitement in anticipating a refund, and the excitement lingers when we imagine and plan what we are going to do with our refund. Covid has added yet other emotions – frustration and consternation when our refund is in the wind so to speak. Social media and TV ads generate all kinds of myths about refunds, most of which are just that – unsupported myths. Recently, the IRS has published IR-2022-80 that discusses 7 common myths about your refund. In this article I will set forth the “official myths” right from the IRS (IRC-2022-80, April 13, 2022):
Myth 1: Calling the IRS or visiting an IRS office speeds up a refund.
It is a mistake to believe that calling the IRS or visiting in person a Taxpayer Assistance Center will hasten your tax refund. These days Commissioner Rettig has diverted almost 1500 employees to deal with the mountains of unopen mail. This means that there are not enough IRS workers to go around. The IRS advises going to the official IRS website, at IRS.gov, and checking, “Where’s My Refund.”
Myth 2: Taxpayers need to wait for their 2020 return to be processed before filing their 2021 return, or that all refunds are delayed due to the number of 2020 returns the IRS still needs to process.
Your 2020 income tax return may be sitting in an 18-wheeler waiting for someone to open the envelope. This sad situation is plaguing the IRS, but the Commissioner anticipates an end to the backlog by the end of 2022. The fact that your 2020 return has not yet been processed does not mean you have a pass not to file your 2021 return. Filing dates are just that – due dates. They are statutory and can only be waived by act of Congress.
Myth 3: Taxpayers can get a refund date by ordering a tax transcript.
There are several types of transcripts. The one most requested is the Account Transcript. This transcript shows when your return was filed, payments made, and penalties assessed. Ordering a transcript has nothing to do with your tax refund and will not impact or speed up the refund process in any way.
Myth 4: “Where’s My Refund?” must be wrong because there’s no deposit yet.
The IRS tries to issue a refund in about three weeks. These days things take longer. Covid has had a negative impact on the IRS in the same way as the general public. This has caused delays in refunds. The best advice given by the IRS is to check the “Where’s My Refund” on the IRS website. This site is updated daily, usually overnight. The best advice from the IRS is to keep checking. Check your status early and often.
Myth 5: “Where’s My Refund?” must be wrong because a refund amount is less than expected.
Tax law is very complicated. Tax returns are regularly checked for corrections and math errors. The refund may be reduced by improper calculation of credits or by a federal offset program. If you owe state taxes, there are agreements between your state and the IRS to offset your IRS refund against a state-related debt.
Myth 6: Calling a tax professional will provide a better refund date.
Your tax professional, whether a lawyer, CPA, or Enrolled Agent, has no juice to speed up your refund process. You may wind up paying your tax advisor additional fees for nothing. Of course, that has the economic impact of reducing your refund.
Myth 7: Getting a refund this year means there’s no need to adjust tax withholding for 2022.
I have to respectfully disagree with the IRS on this point. When you consistently get a refund that may either be something you have planned or a sign that you have too much withholding. The IRS only pays interest on refunds if issued past the statutory due dates. Even when the IRS pays interest on a refund, they pay one percent less than they charge people who owe taxes. Instead of the IRS keeping your money for many months without paying interest, that same money could earn a return in your pocket.
In this era of living within a pandemic, you have to expect processes within any government to be slower than usual. There is no amount of calling or proactivity that is going to cause the IRS or any state taxing agency to speed-up your refund. Patience is the motto of the day.
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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