Tax season officially opened Monday, with most people having until April 18 to file their 2021 tax returns. As the new tax season opens, the Internal Revenue Service (IRS) faces a significant backlog as it is still working through millions of tax returns from last year.
The massive backlog from last year is not the agency’s only issue, as understaffing, increased workloads, and funding shortages also hamper the agency’s efficiency.
“The service is in the roughest shape it’s been in, in 50 years,” said Mark Everson, the IRS commissioner during the George W. Bush administration.
The IRS has “huge backlogs right now that are unprocessed returns from prior years, refund requests, a lot of correspondence that hasn’t even been opened, and it’s very tough to get through on the phone.” Everson told NPR. “So that’s a bad cocktail.”
The IRS’s internal watchdog, National Taxpayer Advocate Erin M. Collins, presented an annual report for 2021 to Congress earlier this month. The report showed that returns belonging to tens of millions of taxpayers suffered processing delays. With 77 percent of filers qualifying for a tax refund, “processing delays translated directly into refund delays.”
Further, the report showed that nearly 35 million tax returns had to be processed manually, and representatives managed to answer only one in nine calls by taxpayers to the IRS.
“[For those] Among the lucky one-in-nine callers who were able to reach [IRS representatives]… hold times averaged 23 minutes,” the report states.
2021 was “the most challenging year taxpayers and tax professionals have ever experienced,” according to Collins.
Issues are compounded because IRS computers are the oldest in the federal government’s major technological systems. Some of the information technology systems within the IRS date back to the 1960s.
The outdated computer systems highlight the issues of insufficient funding for the IRS. According to Collin’s report, the IRS budget has declined by roughly 20% in the last ten years, at the same time that the number of tax filers has increased by 13%.
As far as staffing shortages, Tony Reardon says that the IRS “has a hard time recruiting because they’re up against Burger King or McDonald’s.” Reardon is the president of the National Treasury Employees Union that represents IRS workers. He told the Associated Press (AP) that fast-food restaurants offer similar wages without workers having to “deal with confusing rules and regulations.”
As of the end of last week, the agency’s careers website listed roughly 180 open jobs. Of those, 42 positions were open to the public, while the rest were available only to internal applicants. Some of the public positions include clerks and tax examiners, which the website lists their pay range as starting at $11 an hour.
The White House acknowledged the issues facing the agency.
“The IRS right now has unacceptable backlogs, and the customer service that people are receiving is not what the American public deserves,” White House Press Secretary Jen Psaki said on Friday.
“The agency has not been equipped with the resources to adequately serve taxpayers in normal times, let alone during a pandemic,” Psaki added.
Psaki called on Congress to pass the Biden administration’s Build Back Better Act, which among other things, would increase the IRS’s budget by $80 billion over ten years. The legislation has so far stalled in Congress.
Psaki asked that taxpayers be understanding of the difficulties the IRS is facing.
“It’s going to take some work, it’s going to take some time, and I think people need to understand that they need funding,” Psaki said.
Further exacerbating the funding and staffing issues that the IRS is facing is an increased workload. In the last two years, the IRS has been responsible for delivering three COVID-19 stimulus packages to Americans. It has also had to implement the new expanded child tax credit.
According to IRS data for the 2020 budget year, more than 240 million tax returns were processed, and roughly $736 billion in refunds were distributed, including $268 billion in COVID-19 stimulus payments.
Donald Williamson, an accounting and taxation professor at American University in Washington D.C., said taxpayers should expect “weeks and weeks” of IRS delays again in 2022.
“You can blame Congress or the IRS. I imagine they’re trying to do the right thing, but it just adds to further complexity,” he told the AP. “My advice in 2022 is file early, get started tomorrow, and try to put your taxes together with a qualified professional.”
Last week, the IRS released a fact sheet of things to remember when filing your taxes in 2022. It provides information on what documents you will likely need to file and suggests using online resources from the IRS website rather than dealing with phone delays. The sheet also has information on what to do if you are still waiting on your 2020 tax returns.