The Internal Revenue Service (IRS) is scrambling to pay tax refunds on unemployment benefits to thousands of Americans before the end of the year as the agency tries to clear a huge backlog of claims.
The unemployment tax refund is high this year leading to the provision of the American Rescue Plan Act that waived federal tax on up to $10,200 of unemployment benefits collected in 2020, according to CNBC. That year, America saw the unemployment rate rose to the highest point since the Great Depression.
The IRS has identified more than 16 million Americans who might be eligible for the tax break. Many people who qualified for the tax break filed their returns before President Joe Biden signed the bill into law on March 11, which means they might have overpaid their federal taxes and were owed a refund. The IRS has already sent nearly 12 million refunds worth more than $14 billion, and it plans to send another batch of refunds before the end of the year.
The IRS will have to work at breakneck speed to complete the refund considering that it still has a separate 6.7 million unprocessed individual returns as of Dec. 4.