These days, millions of Americans are checking their email for a long-awaited email from the Internal Revenue Service (IRS) approving a generous tax refund. However, that long-awaited message may take a while to arrive. You may be unaware of several reasons why this is the case.
Tax season is at its peak, and while the IRS expects to process approximately 140 million returns by April 15, not everyone will celebrate victory. What’s the reason? Refunds may be reduced or denied for a variety of reasons. And be aware that this occurs while Elon Musk and the Trump administration are scissoring IRS employees.
Reasons that can leave you without your tax refund
In the first scenario, you may have almost received your refund, but the IRS determines that there is a deduction because you owed child support payments.
If you fell behind on your children’s alimony payments, the government has the authority to take your refund and send it directly to the appropriate recipient. If you owe money to your children, you should pay it off before the IRS does.
If you owe money to the government for student loans, the IRS may deduct a portion of your tax refund. The IRS uses a program known as TOP to direct your money toward those debts. And here’s a hard fact: last year, people owed the federal government 2.3 billion in non-tax debt! Are you a part of the statistic? Better check your accounts.
If you owe taxes, say goodbye to your refund
Do you believe that only the federal government plays hardball? Nothing. If you owe your state taxes (whether on income, property, or something else), the IRS can deduct that amount from your refund and send it to the appropriate state agency. In other words, double auditing. Before you spend that money, make sure you don’t have any outstanding debts with your state.
Finally, if you received unemployment compensation but underreported it, or if you owe money for those benefits, the IRS may adjust your refund. And keep in mind that, while unemployment benefits appear to be a benefit, they are taxable income. If you made a mistake when reporting them or have outstanding debts, be prepared to see how they will be deducted from your paycheck.
More delays and delays: What about layoffs at the IRS?
Just when most people need answers, the Department of Government Efficiency (DOGE) is laying off thousands of IRS employees. According to unions and experts, this could result in everything taking twice as long.
“A key result is that almost all federal probationary employees, which generally means people who joined in the last year or two and have not yet qualified for the strong job protections that government jobs are generally known for (reportedly 200,000 federal employees) face the possibility of being laid off,” stated a tax agency worker whose colleague quit.
The American tax system relies on voluntary compliance. We all play fairly in theory. What happens if the referee (the IRS) runs out of players? With mass layoffs, the party gets murky.
The IRS trust you: don’t try to fool them
The IRS does not rely solely on your good faith. It has entire teams dedicated to auditing statements, looking for errors, and investigating fraud.
However, if they fire those who do that job, the situation becomes complicated. Fewer auditors mean fewer controls, which means more people can sneak in without paying the correct amount.
And here’s the drama: while you and I continue to be model citizens by paying on time, there will be those who take advantage of this to cheat. Unfair? Completely. But that’s what happens when the guard is short-handed.
It’s not only about evaders. Consider how long it takes the IRS to respond to a call, resolve a question, or process a refund. With fewer employees, the situation could worsen. Does your statement contain an error? Be prepared to wait months, rather than weeks.
Do you have to fight a claim in court? Without trained in-house lawyers, the situation will be disastrous. Even simple procedures can become an odyssey. If your business relies on customer refunds, it’s important to have a backup plan in case the funds are delayed or never arrive.
