Delayed Refunds Due to RRC Discrepancy

Many clergy are still waiting on refunds when they filed their tax return in February. Some tax returns take longer to process than others, including when a return:

  • Includes errors such as an incorrect recovery rebate credit (RRC) amount
  • Was filed with missing information
  • Is affected by identity theft or fraud
  • Includes a claim filed for an earned income tax credit or an additional child tax credit using 2019 income
  • Includes a Form 8379, Injured Spouse Allocation (this can take up to 14 weeks to process)
  • Needs further review in general

The IRS liaison stated that the majority of delayed processing of returns are due to the incorrect recovery rebate credit amount reported, where the IRS’s records show that an economic impact payment (EIP) was issued.

If there is a discrepancy between what was reported on the tax return and what the IRS has on file for the RRC amount (stimulus payments one and two) the IRS is manually verifying the tax return for credit eligibility. If the eligibility has not been met, the IRS will generate Letter 105C or Letter 106C, Correspondence for Disallowing a Claim. This letter provides for appeals rights in disallowing a claim. 

However, if the discrepancy is not an eligibility issue, and the IRS records show an EIP was made, the IRS representative is routing the return to the Accounts Management team for further research, which includes tracing EIP funds and identity theft issues.

For more details, refer to the IRS FAQ 

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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