Tax refund delays are widening across the U.S. this filing season — and the ripple effects could matter to crypto traders and anyone counting on a refund to fund investments or pay bills.
What’s happening
A mix of budget cuts, outdated software, and a legal fight over whether states must adopt recent federal tax changes have created a patchwork of hold-ups. Tax experts warn that state tax “conformity” — whether and how states adopt federal changes — is a major complication this year.
Key causes and timelines
- State-federal conformity chaos: Richard Pon, a CPA in San Francisco, says the biggest hurdle is that “some states conform, some don’t conform and some only partially conform” to the new federal tax laws, leaving states scrambling to update forms and systems.
- Federal season kickoff vs. state action: The IRS kicked off the tax season on Jan. 26. Several states, however, were still finalizing updates or passing conformity bills after that date, forcing processing delays.
States and districts to watch
- Idaho: Processing delays of up to six weeks after budget-driven cuts to temporary staff. Gov. Brad Little didn’t sign Idaho’s federal conformity bill until Feb. 11 — after more than 158,000 residents had already filed. Tax Commission Chairman Jeff McCray noted that system and form changes “normally take nine months,” but the agency is prioritizing updates and taxpayer guidance.
- Oregon: Paper returns won’t be processed until at least the end of March, with the first refunds expected in early April. The state says late delivery of forms and data from the IRS delayed its system updates, pushing paper filers well into spring.
- New York: Some early filers ran into a TurboTax-related software issue that was expected to be fixed by Feb. 4 but reportedly left some returns stuck in a processing loop, delaying refunds for those who filed in January and early February.
- South Carolina: The state chose not to conform to the recent federal changes, meaning taxpayers must manually add back tip and overtime deductions. Missing that step can force an amended return — and further delays.
- Washington, D.C.: The most complicated case. Congress reversed DC’s earlier decision not to adopt the federal changes during tax season; the law was signed on Feb. 18. That flip triggered a legal dispute, forced delays in electronic and paper 2025 District income tax forms, and may require roughly 60,000 residents who already filed to refile. If the litigation continues, refunds could be delayed as far out as September and disrupt roughly $400 million in DC government cash flow.
Practical steps for taxpayers (and crypto traders)
- For federal returns: Use the IRS “Where’s My Refund?” tool if you’ve passed the usual 21-day window. Paper federal returns can take up to 12 weeks.
- For state returns: Check your state Department of Revenue website for the latest processing updates — the timeline varies widely by state.
- If you’re stuck: Tax advisors say calling the IRS can sometimes move things faster than waiting for automated messages.
- Crypto-specific note: If you were counting on a refund to fund crypto purchases, staking, or margin positions, expect potential liquidity impacts and plan for delays. Also remember that confused state conformity rules could complicate crypto tax reporting this season.
Bottom line
Refund delays this season are a broad, state-by-state problem caused by staffing cuts, software glitches, and messy state-federal conformity changes — and the fallout could affect households and traders who planned to rely on refunds. Check your federal and state portals, and contact the IRS or your state revenue office if you need a more specific update.
Read more AI-generated news on: undefined/news
