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Why the IRS has received 2 million fewer tax returns this year

Marielle Segarra Mar 13, 2019
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People are afraid to file their taxes — and accountants are moving slower.
Joe Raedle/Getty Images

Every week, the IRS puts out data on how filing season is going. And we’ve noticed a consistent trend — fewer people have been filing their tax returns. The latest data release shows that, as of March 1, the agency had received nearly 2 million fewer tax returns than it had at the same time last year. What’s the holdup?

Remember when the IRS said people were getting smaller tax refunds this year? That freaked people out. “I have a feeling that I’m going to owe taxes, and I’m just pretty much holding off,” said Shari Walters, from the Bronx. “I’ve got the money to pay it,” said Collin Van Dyck from Durham, North Carolina. “It’s just really a psychological thing. I just don’t want to know.”

Matt Metras, a tax preparer at MDM Financial Services in New York, calls this phenomenon “ostrich-in-the-sand syndrome.” He said he’s heard these concerns from his clients, who say things like, “‘Well, I talked to my friend so-and-so, who said that they ended up paying thousands of dollars more in tax this year — is that going to happen to me?'”

There could be something else going on here, too. This is the first filing season under the 2017 tax law overhaul, and tax preparers are still trying to understand the law. Also, as a result of the overhaul, preparers are finding glitches in the software they use to process returns.

“There’s just a lot of little complications this year that are just making it a much slower process,” said Ed Zollars, a certified public accountant at Thomas, Zollars & Lynch Ltd. in Phoenix.

We should note: The size of the average refund has rebounded, according to the latest IRS data. As of March 1, the average refund is up by almost 1 percent year over year.

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