What's happened
Taxpayers in the UK and US face significant delays in refunds. HMRC is processing claims from January 2025, with some taking over 10 months. Meanwhile, the IRS warns of a strained season due to staff cuts and new tax law changes, risking delays for millions of returns.
What's behind the headline?
The delays in tax refunds highlight systemic issues in both the UK and US tax agencies. HMRC's backlog stems from staffing shortages and a focus on newer claims, which risks alienating taxpayers waiting months for refunds. The IRS's workforce has shrunk by 26%, and with major tax law changes, the agency's capacity to handle 164 million returns is compromised. This situation will likely lead to increased taxpayer frustration, potential financial strain for individuals waiting on refunds, and a higher risk of errors or missed deadlines. The agencies' investments in digital services may mitigate some delays long-term, but immediate capacity remains strained. The timing suggests that both agencies are under pressure to modernize and streamline processes, yet current staffing and legislative burdens threaten to undermine these efforts.
What the papers say
The Guardian reports that delays in HMRC refunds are now common, with some cases taking over 10 months, and criticizes the agency's focus on current claims at the expense of older requests. The NY Post emphasizes the importance of early preparation for tax season, highlighting software deals and the benefits of filing early to avoid last-minute stress. Meanwhile, AP News and The Independent detail the IRS's staffing reductions—down from over 102,000 to approximately 76,000 employees—and warn that the upcoming tax season could be disrupted by these cuts and new legislative requirements. Both sources agree that staffing shortages and legislative complexity are key factors impacting the efficiency of tax agencies, with potential consequences for millions of taxpayers.
How we got here
Both HMRC and the IRS are experiencing backlogs in processing tax refunds. HMRC's delays are partly due to staffing shortages and prioritization of current claims, while the IRS faces workforce reductions and new tax law implementation, which could complicate the upcoming filing season.
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