The backlog of raw IRS tax returns has grown to 21 million

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 more quickly, the national tax ombudsman said. taxpayers in a report released Wednesday. .

The report offers a critical assessment of the Biden administration’s handling of the IRS, which has been burdened by staff and funding shortages in recent years, in taking on the responsibility of delivering economic relief money during the pandemic.

The tax agency’s independent watchdog said the IRS was slow to use relief funds it received as part of the $1.9 trillion stimulus package Congress passed in March 2021. It said the agency should have moved faster to increase hiring, reassign employees, and make technology changes that could have eased the backlog.

“It is deeply concerning that the backlog continues to grow, primarily because millions of taxpayers have been waiting six months or more to receive their refunds,” Erin M. Collins, the national taxpayer advocate, wrote in the report.

A year ago, the IRS had 20 million unprocessed tax returns. That backlog has grown to 21.3 million as of the last week of May.

The IRS disputed the taxpayer advocate’s findings, saying the most recent data, through June 10, showed unprocessed returns had fallen 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 progress in handling unprocessed tax returns,” IRS representative Jodie Reynolds said in a statement.

Paper tax returns continue to bog down the IRS, as documents must be manually transcribed into their antiquated computer systems.

Communication is also a major hurdle, Ms. Collins said, with taxpayers reaching out to customer service agents over the phone and waiting on hold an average of 29 minutes. Only 10 percent of the 73 million calls the IRS received were answered by an agent. On both counts, those metrics are worse than last year.

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

The Treasury Department, which oversees the IRS, said Tuesday that the agency expected to soon finish processing all error-free individual tax returns received last year, with business returns filed in 2021 completed “shortly after.” A senior Treasury official noted that the IRS had already increased hiring and diverted employees to help clear the backlog.

The IRS has had trouble hiring staff even when it has the funds to do so. The report noted that the agency has set a goal of hiring 5,473 people at its application processing facilities this year, but has only hired 2,056 so far.

For taxpayers, dysfunction at the IRS has led to growing frustration as they wait for refunds at a time of runaway inflation.

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

The taxpayer advocate suggested that 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,” said Ms Collins. “That, of course, is not an option for American taxpayers, which is why it is critical that the IRS increase staffing at its telephone call centers to handle the volume of calls it receives.”

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