Sorry, your tax refund has been delayed

By Bankrate.com

Some taxpayers who file their returns early this year might be disappointed in how long it takes to get their refunds. The Internal Revenue Service says the processing of around a million returns, along with the issuance of any refund checks, could be slowed because of tax-form complications.

You're most in danger of a delayed IRS check if you plan to take the state sales tax, educator expenses, or tuition and fees deductions, regardless of whether you claim just one or all three. This tax-break trio was signed into law in late 2006.

But don't blame just the IRS. Congress played a big part in creating the problem because it was slow to put the popular breaks back on the books. The deductions technically expired at the end of 2005. It took Congress almost a full year to reinstate them.

That delay is why you might encounter refund delays. But the IRS offers a couple of solutions. Filing electronically may be the answer. But for taxpayers with a penchant for filing paper forms, follow the instructions below to sort out the sales tax or make education-related adjustments.

What might go wrong

While Capitol Hill was wrangling over the renewals, the IRS pushed ahead in readying 2006 tax material. To ensure that the current filing season would start on time, the IRS had to get forms to its printer in November, about six weeks before the final tax-break vote.

Because there was no guarantee that Congress would extend the expired deductions, any mention of them was omitted from the final forms. So now taxpayers and IRS employees alike must deal with "special instructions" to claim the deductions missing from this year's returns.

The IRS expects some filers to make mistakes entering the claims on form lines that are already designated for other tax breaks.

In announcing the makeshift deduction process, IRS Commissioner Mark W. Everson said, "The recent changes in the law mean the IRS will not be able to process a small percentage of (these) individual tax returns until early February."

In January 2005, the IRS received around 930,000 returns that included claims for at least one of the three extended tax breaks. The tax agency is estimating it will get, and have to hold for a few extra weeks, a similar number this year.

How to avoid problems

One way to bypass this season's form complications is to use tax software. Most of the products were issued in a preliminary format months ago, with instructions to periodically check the manufacturers' Web sites for updated information and forms.

"This has had a lot of attention, but over the years there have been changes that came in after the program was in stores," says Julie Miller, a spokeswoman for Intuit, the maker of TurboTax. "Even when there isn't (last-minute) legislation, every year some federal forms are not ready when filing season kicks off. And we've had lots of practice with state tax forms that typically come in later than federal tax forms, sometimes not until late January."

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