If you thought that last tax season got off to a sluggish start, you might be surprised at this year’s numbers. Though the Internal Revenue Service (IRS) opened tax season on time, initial statistics show that taxpayers aren’t lining up to file early returns.
Tax season opened on January 27, 2020, one day earlier than in 2019. In the first full week of tax season (ending January 31, 2020), the IRS received 15,777,000 individual income tax returns. That compares with 16,035,000 received in 2019, a drop of 1.6%. On its face, that’s not a significant drop, but compared to the 2018 numbers, the decrease is noticeable. In 2018, the IRS received 18,302,000 individual income tax returns received by the same time last year, a drop of nearly 14%.
The IRS also reported a drop in the rate that individual income tax returns were processed in the first week. Again, the decline of nearly 3% isn’t necessarily telling. Still, it appears to be a continuation of a drop from the prior year when almost 25% fewer returns were processed during the first week of tax season.
And what about those tax refunds? Typically, taxpayers with simple tax returns who count on their tax refunds file early in the tax season.
In the first week, the IRS issued just 4,299,000 tax refunds as compared to 4,672,000 – a drop of 8.0%. But compared with those 2018 numbers? The IRS issued 6,171,000 tax refunds for the same period in 2018. That’s a drop of more than 30% over two years. The total value of tax refunds issued is $8.036 billion, down 7.8% for the prior year (and tracking with the number of refunds). Fortunately for taxpayers, the average tax refund is up a few dollars so far: $1,869 per taxpayer compared to $1,865 in 2019, but it was $2,035 for the same period in 2018.
Also up? Visits to irs.gov.
So what does the data tell us? This early in the filing season, not a great deal. All kinds of hunches have been floated around about reasons for tax filing delays – from confusion over tax extenders to the suggestion that a steady economy means there’s not a rush to file for refunds. Others point to the mandatory waiting period for some tax refunds and note that taxpayers may be adjusting their filing schedules accordingly: the IRS must wait until mid-February to begin issuing refunds to taxpayers who claim the earned-income tax credit (EITC) and the additional child tax credit (ACTC). That took taxpayers by surprise in 2017, but taxpayers may now be used to the delay and file a bit later as a result.
Whatever the reason, taxpayers don’t appear to be eager to file early in 2020. That could change. Tax season is just getting started: Tax Day is April 15, 2020, for most taxpayers.