Accounting Small Business Taxes Internal Revenue Service

Why Is Your Business's Tax Return Still Being Processed?

Skip Gronauer

It’s normal to have a lot of questions about the tax return process, especially when you’re waiting for the IRS longer than expected.

There are a number of reasons for a tax return to be delayed, including errors, backlogs, and verification delays.

At Chaliff + Associates, small businesses come to us frequently with questions about their tax return process, including delays. Let’s take a look at some of the most common reasons why a business tax return may be delayed.

IRS BACKLOG OF PAPER RETURNS

Currently, the IRS’s return rate is delayed because of a backlog of paper returns.

In 2022, the IRS processed more than 261 million tax returns and additional documents for the 2021 fiscal year. More than 90% of returns are filed electronically, but that still leaves 26 million returns submitted on paper.

These kinds of delays affect the entire system. Even though you likely filed an electronic return, delays in one area of the IRS can certainly impact others.

You May Have Made a Mistake on Your Return

Mistakes made in the tax filing process can slow down the return process, especially if the IRS is already running behind.

Some of the mistakes that can lead to a delay include:

An incorrect routing number or account number
An incomplete return
Computing mistakes
Mismatched tax ID numbers
Filing the tax return too early or too late

YOU MIGHT BE AUDITED

A delay in your return is sometimes– but certainly not always– a sign of an impending audit.

Audits can be stressful, but if this is the cause for your delay, then there is nothing to do but wait until you receive instructions from the IRS.

Detailed and accurate bookkeeping is your best strategy to both avoid an audit and ensure a smooth auditing process if it is ordered.

WHEN IS IT TIME TO WORRY ABOUT A DELAYED RETURN?

According to the nonprofit Tax Foundation, the IRS is required to process business tax returns within 90 days. But since 2020, the timeframe has been significantly longer. In November 2021, the average timeframe for processing a return was 166 days.

Because of these widespread delays, you shouldn’t be too worried just because your return is still labeled as being processed.

However, if you want to avoid the stress associated with delays caused by mistakes and poor bookkeeping, one of the best strategies is to work with a qualified business CPA.

A dedicated small business CPA supports businesses like yours with managing all the tasks associated with bookkeeping, including:

Personal, corporate, and partnership tax returns
Business license returns
Annual reports
Personal property taxes
Quarterly tax projections
Payroll
Monthly reviews
Forecasting and planning
Budgeting
Cash flow analysis
Strategic business advising

By providing these services, business managers can focus on growing their businesses instead of worrying about taxes, bookkeeping, and records management!