With the end of tax season, taxpayers remain frustrated with the extreme slowdown at the Internal Revenue Service. At the beginning of the 2022 tax season, the Internal Revenue Services had not processed 24 million returns for the 2021 tax season. The backlog included some with owed refunds. Due to overwhelming call volume, most taxpayers could not reach a representative. Currently, the Internal Revenue Service only answers 10% of calls with a 30-minute hold time. Most people never get to an agent or cannot wait on the 30-minute hold time.
Through 2022 the Internal Revenue Service was unable to manage the backlog. Many taxpayers have received automated penalty notices for unpaid taxes leading to the agency stopping the sending out of automatic notices to taxpayers since many returns are stuck in the backlog.
The backlog is affecting taxpayers that have filled paper returns. The Internal revenue service cannot process the current year’s paper returns until the backlog from 2021 paper returns has been completed. This delay can be frustrating for those expecting returns from their taxes. With this backlog, many taxpayers still have not been paid their returns for the 2021 tax season.
The budget is impacting the ability of the Internal Revenue Service to pursue tax crime, conduct criminal tax investigations, and criminal tax audits, among other activities.
In March of 2022, the Commissioner testified in front of the House Ways and Means Committee to discuss the backlog issue. The Commissioner discussed the current tax season, ongoing resource challenges, and the inadequate budget. The problem of the 2.4 million cyberattacks per day has dramatically increased over the last five years.
In June, the National Taxpayer Advocate, an independent organization within the IRS, reported that 21.3 million tax returns remain unprocessed. That is 7 percent more than at the same time last year. Budgetary cuts and staff shortages led to agency-wide delays that have affected millions of Americans and small businesses. Since 2010, GOP-led budget cuts shrunk the agency’s funding by 20 percent even as the number of individual tax filers grew by 19 percent.
In 2023 the Internal Revenue Service has objectives that they will be implementing to try and alleviate this issue that they have been having over the last two years. These new measures include automating the processing of paper tax returns, reducing barriers to e-filing tax returns, Improving the IRS’s hiring and training processes, and improving telephone service. These objectives should improve the processing of tax returns and taxpayer service generally.
The Commissioner expects the backlog will be resolved by the end of 2022. The Internal Revenue Service remains challenged, along with the taxpayers relying on the agency to maintain compliance and promptly obtain refunds. Although the Internal Revenue Service has an action plan, it is ultimately up to the taxpayer to accept the limited services that can be provided for the current budget.