WASHINGTON - Treasury Department officials on Monday said that the Internal Revenue Service will face “enormous challenges” during this year’s tax filing season, warning of delays to refunds and other taxpayer services.

In a phone call with reporters, Treasury officials predicted a “frustrating season” for taxpayers and tax preparers as a result of delays caused by the pandemic, years of budget cuts to the IRS, and the federal stimulus measures that have added to the tax agency’s workload.

Typically, IRS officials enter filing season with an unaddressed backlog of roughly 1 million returns. This year, however, the IRS will enter the filing season facing “several times” that, Treasury officials said, although they declined to give a more precise estimate. The IRS website says that as of Dec. 23, 2021, it still had 6 million unprocessed individual returns, and as of the start of this month it still had more than 2 million unprocessed amended tax returns, a separate category.

The IRS closed last filing season with more than 35 million unprocessed returns, a fourfold increase from the last year before the pandemic. As the backlog increased, the IRS also failed to respond to the enormous increase in calls for assistance. Only 9 percent of calls were answered by an IRS customer service representative, while only 3 percent were answered for the 1040 support line for individual income tax returns, according to the National Taxpayer Advocate, a watchdog group.

The pandemic forced the closure of many in-person centers where paper forms are processed, while also affecting the IRS workforce. But even before the pandemic, budget cuts to the IRS forced through by Republicans had led to a roughly 25 percent decline in the size of its staff. And these challenges were exacerbated by the federal response to covid, which required the IRS to implement big new programs, from stimulus payments to the expanded Child Tax Credit, for tens of millions of families.

Treasury officials said the tax filing deadline for 2021 income is Monday, April 18. Treasury officials said there are no current plans to extend that deadline this year, urging taxpayers to file as early as possible.

Treasury officials also urged taxpayers to file their returns online and create an account at IRS.gov.

The IRS budget has been significantly cut by roughly 20 percent over the last decade across its major areas of operation, including tax enforcement, taxpayer services, and agency expenses for information technology, among other operational needs.

Even if the IRS budget is increased, it would likely not be in time to allow the agency to hire for this filing season. As a result, the IRS heads into its busiest time of year with a workforce that is now the same size as it was in 1970, even though the U.S. population has grown by 60 percent since that time, according to Treasury officials.

The agency also had fewer than 15,000 people tasked with handling more than 240 million calls, which translates into roughly 16,000 calls per employee. Treasury officials also said there are fewer auditors at the IRS that at any point since World War II.

Roughly 90 percent of taxpayers file their returns electronically, but about 10 percent still mail them in on paper, the category that causes the most delays. The National Taxpayer Advocate’s report from last year points out that many taxpayers filing printed returns would prefer to do so electronically but can’t, because taxpayers are required to submit statements or other forms that the agency does not process online. (Source: The Washington Post)

Story Date: January 11, 2022