According to a study issued on Wednesday, the Internal Revenue Service is experiencing an even worse backlog for this tax season than it did a year ago, with delays causing “exceptional financial hardships” for filers.
The National Taxpayer Advocate, an independent monitor within the organization, discovered that taxpayers are having to wait longer on the phone and that delays in processing paper returns have been ranging from six months to a year.
One day after the IRS said that it is on schedule to clear the backlog of 2021 tax returns this week, the report on taxpayer problems, which must be reported to Congress twice a year, was released.
There are recommendations for politicians to think about in the Objectives Report to Congress.
National Taxpayer Advocate Erin Collins stated in the study that “At the end of May, the IRS had a greater backlog of paper tax returns than it had a year ago, and its rate of processing paper tax returns was declining.”
Millions of taxpayers have been waiting six months or longer to receive their refunds, so the fact that the backlog is still growing is quite troubling, Collins continued.
Financial troubles that are “unprecedented”
According to the study, the IRS had 21.3 million unprocessed paper tax returns for both corporations and individuals at the end of May. Over the same period last year, there has been an increase of 1.3 million.
According to Collins, “taxpayers who submit paper returns claiming a refund in 2022 will have to wait five months or longer to obtain their refunds” because of how long paper returns take to complete.
Wally Adeyemo, the deputy secretary of the Treasury, and Chuck Rettig, the commissioner of the Internal Revenue Service, stated this week in a joint letter to Sen. Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee, that it takes six to eight IRS employees to manually process each paper tax return that is submitted.
The letter stated that the agency needs consistent, long-term financing to invest in modernizing outdated technology, enhancing taxpayer service, and boosting voluntary compliance to prevent crises similar to this one in the future.
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Only 2,056 people were employed, falling short of the agency’s target of hiring roughly 5,500 more workers to process returns, according to the National Taxpayer Advocate study.
Tax refunds “may comprise a large amount of their family income for the year, particularly for lower-income taxpayers who get Earned Income Tax Credit benefits,” Collins said. Therefore, millions of taxpayers are experiencing unprecedented financial difficulty due to these processing delays, along with many others.
In addition, the average phone wait time climbed from 20 minutes to 29 minutes from the previous year. Additionally, after the epidemic, taxpayers’ already slim odds of speaking with an agent drastically decreased. According to the research, customer service representatives only answered 10% of taxpayer calls last year as opposed to 1 in 4 calls before the epidemic.
The statistics in the article “are not the most accurate nor most recent figures,” IRS spokesman Jodie Reynolds told the Associated Press.
According to Reynolds, the IRS is currently processing tax returns far faster than it was a year ago. By hiring additional contractors, rearranging employees, and requiring employee overtime, the IRS “continues to make great progress on the inventory,” she said.
Need for a technology overhaul
No one feels the weight of backlogs more than front-line employees who have been slogging through that paperwork for months, according to Tony Reardon, president of the National Treasury Employees Union.
The IRS, he claimed, “needs more people, more money, and updated technology desperately if backlogs are to be avoided in the future.”
According to the Taxpayer Advocate report, the leadership of the IRS merits praises for managing “an exceedingly intricate tax system,” outdated technology, insufficient manpower, and enduring difficulties resulting from spreading COVID-19-related applications.
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The study stated that “despite these difficulties, the tax system as a whole has held up well over the previous two years.”
