Delayed Refunds Due to RRC Discrepancy

We’ve been hearing from members that some of their clients are still waiting on refunds when they filed their tax returns in February. Some tax returns take longer to process than others, including when a return:

• Includes errors such as an incorrect recovery rebate credit (RRC) amount
• Was filed with missing information
• Is affected by identity theft or fraud
• Includes a claim filed for an earned income tax credit or an additional child tax credit using 2019 income
• Includes a Form 8379, Injured Spouse Allocation (this can take up to 14 weeks to process)
• Needs further review in general

We’ve contacted our IRS liaison who stated that the majority of delayed processing of returns are due to the incorrect recovery rebate credit amount reported, where the IRS’s records show that an economic impact payment (EIP) was issued.

If there is a discrepancy between what was reported on the tax return and what the IRS has on file for the RRC amount (stimulus payments one and two) the IRS is manually verifying the tax return for credit eligibility. If the eligibility has not been met, the IRS will generate Letter 105C or Letter 106C, Correspondence for Disallowing a Claim. This letter provides for appeals rights in disallowing a claim. The taxpayer will have to reply to the correspondence before the IRS will continue processing the return.

However, if the discrepancy is not an eligibility issue, and the IRS records show an EIP was made, the IRS representative is routing the return to the Accounts Management team for further research, which includes tracing EIP funds and identity theft issues.