In the year 2025, a complex scenario emerges in the processing of tax refunds for millions of Americans.
Tax authorities manage declarations that are critical for working families who use credits like the popular EITC and ACTC to meet their basic needs. The process is based on a variety of variables and established regulatory procedures.
Several factors can cause refund processing delays. Errors in the declaration, such as incorrect numbers or missing forms, as well as additional checks to prevent credit fraud, prolong the process. The accumulation of declarations during peak season significantly increases institutional response times.
Why some tax refunds are arriving late this year
Among the general reasons cited by the IRS are notifications such as CP21-A, which provides 60 days to correct errors. To prevent identity theft, verifications of credits such as EITC and ACTC are increased, affecting declarations that require a detailed evaluation by the tax agency.
Debts owed to the IRS or other agencies have an impact on the process because outstanding amounts are compensated through the Treasury Compensation Program. Similarly, suspicion of identity theft, denoted by Letter 5071C, imposes a verification protocol that can extend the wait for reimbursement in each case.
DOGE is reducing IRS staff: Will this cause delays?
In the year 2025, with the arrival of Donald Trump and his “secretary” of the Department of Government Efficiency (DOGE), Elon Musk, dozens of thousands of federal employees were ordered to be laid off, causing a stir in government agencies and delays in paperwork and procedures.
Hiring cuts resulting from White House decisions have an impact on return processing. According to various media reports, up to 90,000 agents could be reassigned or laid off, reducing the tax agency’s operational capacity during the tax season.
The $40 billion cut in IRS services has also been cited as a reason for the delays. It is one of the largest budget adjustments in American history, and the cuts include the previously mentioned staff reduction.
Commissioner Danny Werfel’s resignation on January 20, 2025, adds to organizational instability. Reader comments, such as Yvette’s on February 17, have highlighted the impact of layoffs during tax season, which puts additional strain on the return review and processing system in an environment of limited resources.
Other factors include filing returns with ITINs that have expired or are about to expire. Although the IRS accepts these cases, a lack of staff can cause additional delays. Similarly, the ACTC credit policies prohibit the issuance of refunds before mid-February, which affects the total refund when the benefit is claimed.