You’ve probably wondered what happens during that mysterious time between when you file your income tax return and when you receive your refund.
While you wait, your return goes through several layers of screening at the IRS. The process takes longer if the computer systems find any errors, suspects identity theft or sets aside your return for other reasons.
Here’s what happens behind the scenes while you wait for your refund.
How Long Does It Take to Approve a Return After It’s Accepted?
It generally takes about 21 days after filing your return electronically to receive your refund, and it can take six to eight weeks to receive it if you file a paper return.
Paper returns take much longer because the IRS must process the information manually before the computer system can screen it.
“Currently, information from paper-filed returns is manually input into the IRS system, and keystroke errors can pose potential problems,” Michelle Marion, managing director, Washington National Tax, KPMG LLP, says.
Thankfully, the IRS is using some of the $80 billion in funding it received from the Inflation Reduction Act to modernize its technology so it can scan and extract data from paper-filed returns rather than having a person input the information.
After the information from paper-filed returns is in the IRS system, it goes through the same process as electronically filed ones. All returns are screened through a set of IRS systems for consistency and validity. These computer programs look for completeness, fraud, identity theft and other issues.
You can check the status of your return with the IRS Where’s My Refund tool 24 hours after e-filing or four weeks after mailing it. The tracker shows three stages: return received (when the IRS begins processing it), refund approved and refund sent.
Between the time when the IRS accepts the return and approves the refund, it goes through an identity verification process and gets screened for errors — like missing schedules or math errors — via the error resolution process, Marion says.
“Depending on the return, certain credits or the income amounts may have been verified by the Automated Questionable Credit Program,” she adds. The IRS also checks if you owe any money to federal agencies, state governments or child support before sending your refund.
[READ : Do You Owe the IRS? How to Find Out]
Why Has My Return Been Accepted But My Refund Has Not Been Approved?
The Where’s My Refund tool will say “refund received” while the IRS is processing your return.
“Keep in mind that you will not see a refund date until the IRS finishes processing and approves your tax refund,” Lisa Greene-Lewis, certified public accountant and tax expert with TurboTax, says. “Once the IRS finishes processing your tax return and confirms your return is approved, your status will change from ‘return received’ to ‘refund approved.'”
Keep reading to discover the many reasons why your refund might be delayed:
You Claimed the Earned Income Tax Credit or Additional Child Tax Credit
Even if your return doesn’t have any problems, your refund may be delayed if you claimed the earned income tax credit or additional child tax credit.
Because the Protecting Americans from Tax Hikes Act of 2015 was designed to help prevent ID theft and refund fraud (it also expanded or renewed several tax credits for individuals), the IRS cannot issue refunds before February 15 for returns claiming these credits, regardless of when you filed.
[Read: When You Should (and Shouldn’t) Worry if Your Tax Refund Is Delayed.]
You Made a Mistake or There’s Missing Information
Your return may take longer to process if it has a mistake, is missing information or the IRS suspects identity theft or fraud.
In this case, the IRS says some programs contact the taxpayer requesting they take action like correcting or validating an item on the return or authenticate their identity. Once you complete the action, the return goes back in the pipeline to continue processing.
“The IRS Error Resolution System identifies potential errors on returns,” Marion says. If the IRS can fix the error and process the return without contacting you first, you’ll receive a notice letting you know that the IRS made changes to your return and your refund.
The notice will be CP11, CP12 or CP13, depending on whether you’re due a refund or owe money as a result of the changes. The IRS says it can take more than 120 days to resolve those issues, depending on how quickly and accurately you respond.
You can look up more information about IRS notices and your rights to dispute an adjustment at the Taxpayer Advocate Service website.
Your Information Doesn’t Match What Your Employer Reported
Your refund may be delayed if the information that employers and others reported to the IRS on your W-2s and 1099s doesn’t match the income you reported on your return.
“After a return posts to the IRS system and within a certain period after the filing deadline, the IRS Automated Underreporter Program may match the income items a taxpayer reports on the tax return with information the IRS received from third party payers, such as Forms 1099 and W-2,” Marion says.
“If a discrepancy is identified by the AUR program, an IRS AUR employee attempts to resolve the issue without contacting the taxpayer. If the employee is unable to resolve the issue, a notice is sent to the taxpayer proposing changes to the tax return,” she adds.
You may receive a CP2000 Notice from the IRS explaining how the numbers on your return differ from the ones third parties reported and it will propose changes to your income, tax, credits or payments.
You may also hear from the IRS with questions about deductions or credits you claimed on your return.
“They may send correspondence requesting more backup information supporting your claim for the deduction or credit,” Greene-Lewis says. “All of these situations can hold up the processing of your tax refund.”
[Read: When You Should (and Shouldn’t) Worry if Your Tax Refund Is Delayed.]
Your Return May Go Through Another Screening Level
Your return may go through another level of screening that the IRS uses to determine whether to audit your return.
“A large percentage of returns are computer scored under the IRS Discriminant Function System, which the IRS says is ‘a mathematical technique used to score income tax returns for examination potential,'” Marion says.
You may receive an audit notice if the information on your return stands out from other similar returns and the IRS wants more information.
“Once a return is selected for examination as a result of computer scoring, it’s delivered to an IRS Classification Unit, where IRS personnel screen the returns for audit potential, selecting only some for audit and identifying the items on those returns that are most likely to need review,” Marion says.
[READ: What Really Happens During an IRS Tax Audit]
“Classification also determines which type of examination should be conducted, such as in the field, office or through correspondence,” she adds.
The IRS generally has up to three years after you file your return to initiate an audit but the timeline can be longer — typically up to six years — if it finds a substantial error.
For more information about tax filing and processing, refunds and IRS notices, visit the Taxpayer Advocate Service website. You can also check out its Taxpayer Roadmap for more information about the steps your return goes through after you file, including the notices you may receive, what happens if your return is audited and your rights if you disagree with the IRS’s decision.
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Here’s What Happens at the IRS After You File Your Taxes originally appeared on usnews.com
