Tax refunds issued so far are smaller than last year, IRS data shows

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(CBS NEWS) - Taxpayers got a double dose of bad news Friday when the Internal Revenue Service released figures on the first week of the filing season. Not only has the agency processed fewer returns compared with the same time period last year as the IRS scrambles to catch up after closing during the partial government shutdown, but Americans also are seeing smaller refunds.

On average, filers' tax refunds are about $170 lower than last year. The average refund so far this year is $1,865, down from $2,035 in 2018.

The IRS is also behind schedule following the record-long government shutdown that ended Jan. 25. While it received 12 percent fewer returns in the first week than in the same period last year, the agency has process 26 percent fewer returns.

Refund amounts can vary a great deal. Last year, the average refund in any given week during filing season could range from $2,000 to just over $3,000. But for many taxpayers, and most working-class filers, the refund is the largest single cash infusion they'll get during the year.

Few changed withholding amount

Of course, a smaller refund doesn't always mean someone paid more taxes. Early last year, businesses were encouraged to adjust how much tax they took out of employee paychecks to reflect the lower tax rates. The IRS also encouraged people to do a "paycheck checkup," saying that "some taxpayers might prefer to have less tax withheld up front and receive more in their paychecks."

The trouble is, few Americans seem to have done that.

According to payroll processing firm ADP, a only a small fraction of workers bothered to change their withholding.

"We thought a number of taxpayers would change the exemptions, but what we found was that a lot of them didn't do that," Pete Isberg, ADP's head of government relations, recently told CBS News. "Not many people took the time or trouble to see if the Tax Cuts and Jobs Act affects them personally."

He added, "I think taxpayers generally will try to avoid thinking about taxes, even after a major overhaul."

First published on February 8, 2019

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