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IRS makes families wait over a year for ‘final’ tax returns of loved ones who died during pandemic

The backlog of more than 35 million 2020 tax returns that the Internal Revenue Service is currently contending will be memorable for a number of reasons. The volume is something that the IRS hasn’t ever dealt with before, and it’s happening at a moment in history where every government action is under scrutiny.

Delayed tax returns are wreaking havoc on families seeking closure after the death of loved ones. And it couldn’t be coming at a worse time.

As of August the IRS had 10.1 million unprocessed final tax returns. Many of these must be processed manually due to fraud concerns, which has been a major roadblock for the IRS as it also deals with a worker shortage.

“I promised my dad before he died that I would take care of this for him,” said Michele Treacy, who lost her father at the beginning of the pandemic. “I’m trying to honor his legacy and my promise to him.”

Months and months have passed, with the IRS still struggling to get refunds and tax documents processed. The problem is that the IRS was behind before they even began. While officials have said that changes in tax laws through the American Rescue Plan caused issues – the IRS was behind by more than 10 million returns processed as tax season wrapped up in the spring.

That number has grown by three-times.

Larry Harris a Certified Financial Planner said frustration is from all angles. The lag comes from Form 1310, which is required to be filed by hand, unlike virtually all other parts of a tax return. It’s only used for individuals when they die. “These situations create a lot of angst for clients when they’re waiting for the refund to close out the estate,” Harris explained.

Over the last decade funding for the IRS has been cut by nearly 20%. While President Joe Biden has called for more investment and staff – particularly for efforts to collect unpaid taxes – many are eager to see simple processes completed – like ‘final returns’ for those who have died during the pandemic.

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