IRS backlog of unprocessed tax returns has grown to 21 million

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WASHINGTON — The backlog of tax returns at the Internal Revenue Service has grown to more than 20 million in the past year despite efforts by the Biden administration to process returns and send refunds faster, the the National Taxpayers’ Advocate said in a report published on Wednesday.

The report offers a critical assessment of the Biden administration’s handling of the IRS, which has been plagued by staffing and funding shortages in recent years while assuming responsibility for providing economic relief funds during the pandemic.

The tax agency’s independent watchdog says the IRS has been slow to use the relief funds it received under the $1.9 trillion stimulus package passed by Congress in March 2021 He said the agency should have moved more quickly to speed up hiring, reassign employees and make technology changes that could have reduced the backlog.

“The fact that the backlog continues to grow is deeply concerning, primarily because millions of taxpayers have been waiting six months or more to receive their refunds,” Erin M. Collins, National Taxpayer Advocate, wrote in the report. .

A year ago, the IRS had 20 million unprocessed tax returns. This backlog grew to 21.3 million by the last week of May.

The IRS disputed the findings of the taxpayers’ attorney and said more recent data, through June 10, showed unprocessed returns fell below 20 million and were down slightly from June. 2021.

“The IRS is committed to having healthy inventories by the end of this year and continues to make great strides in processing unprocessed tax returns,” said Jodie Reynolds, a representative for the IRS. IRS, in a statement.

Paper-based tax returns continue to bog down the IRS, as documents must be manually transcribed into its outdated computer systems.

Communication is also a major hurdle, Ms Collins said, with taxpayers seeking to reach customer service agents on the phone waiting an average of 29 minutes. Only 10% of the 73 million calls received by the IRS were answered by an agent. In both cases, these statistics are worse than last year.

The Biden administration has asked for more resources for the IRS and asked for $80 billion over a decade to overhaul its technology and bolster its staff. Democrats have blamed the agency’s problems on Republicans, who have long tried to starve it of funding and accused it of political bias against conservatives.

The Treasury Department, which oversees the IRS, said on Tuesday that the agency expects to soon finish processing all error-free personal income tax returns received last year, with business returns filed in 2021 being completed.” shortly thereafter”. A senior Treasury official noted that the IRS had already ramped up hiring and diverted employees to help clear the backlog.

The IRS struggles to hire staff even when it has the funds to do so. The report notes that the agency has set a goal of hiring 5,473 people in its submission processing facilities this year, but has only hired 2,056 so far.

For taxpayers, the dysfunctional IRS has led to mounting frustration as they await refunds in an era of runaway inflation.

Ms Collins estimated that nine million taxpayers are experiencing late repayments. More than 300,000 victims of identity theft will have to wait at least a year.

The taxpayer advocate suggested the IRS work to automate the processing of paper tax returns and make it easier for taxpayers to file electronically. Ensuring phones are answered should also be a priority.

‘If a private company didn’t answer nine out of 10 customer calls, customers would go elsewhere,’ Ms Collins said. “That, of course, is not an option for US taxpayers, so it’s critical that the IRS ramp up its call center staff to handle the volume of calls it receives.”

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