A combination of factors have created a "perfect storm" at the Internal Revenue Service, causing many tax refunds to be delayed. As the agency switches to more sophisticated programs, it has kicked out returns with unexpectedly high refunds. And there are more unexpectedly high refunds because of changes in the tax laws.
Seniors who received a larger standard deduction are getting refunds of taxes withheld from Social Security benefits and other income. Workers whose tips became tax free, but who didn't adjust withholding, suddenly found themselves expecting refunds when they filed last April.
But as the returns were processed, these unusual larger payments were flagged. And instead of being processed electronically, they were passed on to a dwindling supply of trained employees at the IRS. The result has been a huge backlog — and long delays in getting refunds.
It's a nationwide problem, according to many CPAs, who say that even using the special phone lines set aside for tax professionals, it can take multiple calls to get through the system on behalf of clients. Individuals have an even tougher time talking to an agent on the phone.
The first letter received by many awaiting their refunds is a demand for proof of identity. It doesn't matter that they have always used the same tax preparer or software. They haven't changed their mailing address or banking information for the expected refund. But when the return is highlighted for review, the first step seems to be a demand for proof of identity because your return has been deemed "suspicious."
Now you're faced with verifying your identity online through the ID.me service used by the IRS. You'll need a valid government-issued photo ID, your Social Security Number, and access to a smartphone with a camera to do a video verification call. You may also need a utility bill or bank statement or pay stub if more information is demanded.
You should also create your own account at IRS.gov/account. That will let you keep track of the processing of your return. But don't expect an immediate refund once your identity is verified. Many people report delays of three months or more, which they track at their online account. That's because the return — even with identity verified — is being handled by an individual IRS agent, who has stacks of refunds to authorize!
Tax law says the IRS should be paying interest on delayed refunds. But the starting point is up in the air. It should be the date the original return was received. Or it could be the date that the identity is verified. The IRS usually only starts paying interest if your refund is delayed more than 45 days past the later of the return due date or the date the return was filed.
The current interest rate for the July-September 2026 quarter is 7% per year, compounded daily. Interest may come either as a separate check, or as part of your eventual refund. Please note, this interest is taxable! You'll receive a 1099 INT next January to include it on your 2026 income.
This year's unexpected refunds caught taxpayers and the IRS by surprise. Make sure it doesn't happen again for your 2026 income. There are some steps you can take to avoid these delays in the future.
—Adjust your withholding now. Assuming you will be in the same tax bracket next year, you'll want to recalculate withholding from Social Security, pensions, and even from your required minimum distributions from retirement accounts. If you overpay the government during the year, you may have a tough time getting the money back next Spring.
—Ask the IRS for an IP PIN. That's a six-digit number that helps prevent someone else from filing a tax return using your Social Security number. You get a new PIN every year. You can get it through your IRS online account. It will help prevent identity verification issues in the future. Note: The IRS will never call you or text you asking for your PIN.
—If you do find that you're getting a refund next year, ask for it to be applied to your future tax obligation, instead of being refunded to your bank account. It seems that process is less likely to trigger suspicion.
This rash of IRS changes is based on real concerns about scams, and at the same time it is engendering new scams. So, remember the IRS will contact you only by U.S. mail, not by phone or text. They have your basic information, so do not give out personal information by return mail, and do not scan QR codes. Never pay a requested balance without confirming the demand comes from the IRS. And make sure you are signing into the correct website — www.IRS.gov — and not a phishing site.
Technology is supposed to make the IRS more efficient. But the transition seems to be merely throwing more paperwork onto fewer staff. This needs a better fix. And that's The Savage Truth.