HOUSTON – KPRC 2 investigates the IRS backlog and how it’s impacting people in our area. Right now, the United States Treasury is still working on some 9 million tax returns from 2020. The delays are causing a domino effect for business owners who need their tax returns to get emergency disaster loans. One Woodlands couple called KPRC 2 Investigates because they worry they will have to close their business if they can’t get help soon.
IRS backlog leaves business owners struggling
In the beginning of the pandemic the CARES Act allowed the Small Business Administration to approve emergency disaster loans without tax records so as not to delay getting the financial help to struggling businesses. But the SBA is now requiring tax returns again knowing the IRS is still behind processing millions of them.
One upscale nail salon in The Woodlands is practically brand new. Beaux’s Toes opened December 2019, about four months before the start of the pandemic.
“When they closed the economy, it pretty much put us back to square one,” said owner Bow Grove.
In 2020, Bow Grove and his fiancé took out a small loan to help them pay bills until they could get customers in the door. Getting that loan was easy. The CARES Act required the SBA to waive required tax documents since the IRS was shut down for the first few months of the pandemic. But with stations still empty these owners now need more help.
“This is a disaster loan. We’re not asking for anything free, just please give us this loan and let us continue,” said Karen Moyers.
This time around, the SBA is requiring Bow’s 2019 processed tax return. He sent it in late to the IRS in February but nine months later he can’t get any updates on how much longer it will take the IRS to complete it.
“I don’t want to say we’re desperate, but we’re desperate. The wheels are turning and the bills keep coming in and it’s tough,” said Karen.
The IRS says visit an office in-person for help
An IRS spokesperson told us Bow should go in person to an Houston-area IRS office in person. But when we tried we found a security guard stopping people saying meetings were by appointment only. The only way to make an appointment is to call a toll-free number.
Karen and Bow waited on hold for three hours and 15 minutes on one call, two and a half hours on another and one and half the next. Each time, they were disconnected after the long wait.
“This isn’t right. It’s not right. I get that the IRS is behind and it’s COVID,” said Karen.
In a statement the SBA told KPRC 2 that verifying tax records is a critical step to cutting down on fraud.
A spokesperson wouldn’t comment on Bow’s specific case but said the COVID Economic Injury Disaster Loan Program has provided more than $310 billion to small businesses.
Their message to Bow and Karen was cut and dry.
“Our hands are tied, until we can get your tax return transcript in our hands. We can’t do anything for you,” said Karen.
The couple also reached out to their Congressman Kevin Brady and so did we. His staff did contact to the IRS and the SBA to try to get the federal agencies to work more quickly to process the loan. So far, that has not been successful.
What is the best way to contact the IRS office about the IRS delays?
You should be able to check the status of your IRS refund anytime on the IRS website. The IRS has a toll free number (844) 545-5640 where you can call and get information about your return, stimulus check or child tax return.
Taxpayer Advocate Service (TAS) is an independent office established within the IRS to help taxpayers resolve problems. This group is having a backlog too, but it’s at least another place where you can go for help.