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Tax return backlog is ‘crushing the IRS’ as pileup exceeds 21 million

IRS Commissioner Chuck Rettig testifies earlier than the Senate Finance Committee on April 7, 2022.

Kevin Dietsch | Getty Photographs Information | Getty Photographs

The IRS backlog of tax returns has swelled over the previous 12 months, regardless of efforts to clear the pileup, in accordance with an company watchdog.

There have been 21.3 million unprocessed paper returns as of Might 31, up from 20 million one 12 months prior, the Taxpayer Advocate Service shared in its mid-year report to Congress.

“Sadly, at this level the backlog remains to be crushing the IRS, its staff and, most significantly, taxpayers,” wrote National Taxpayer Advocate Erin Collins, who leads the unbiased group inside the IRS.

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“That the backlog continues to develop is deeply regarding, primarily as a result of hundreds of thousands of taxpayers have been ready six months or extra to obtain their refunds,” Collins added.

Whereas greater than 90% of taxpayers filed returns electronically final 12 months, roughly 17 million despatched paper filings, contributing to the backlog.

Over the previous 12 months, refund delays for some paper-filed returns have exceeded six months, with many ready 10 months or extra, in accordance with the report.

Watchdog shares ‘missed alternatives’ for IRS

The report additionally highlights “missed alternatives” for the company over the previous 12 months after figuring out points with paper returns.

“Had the IRS taken steps a 12 months in the past to reassign present staff to processing capabilities, it may have diminished the stock backlog carried into this submitting season and accelerated the cost of refunds to hundreds of thousands of taxpayers,” Collins wrote.

Over the previous 12 months, the company could have boosted effectivity with new scanning know-how, or moved sooner to make use of a part of the $1.5 billion funding from the American Rescue Plan of 2021 to rent new staff, the report mentioned.

“The IRS is dedicated to having wholesome inventories by the top of this 12 months and continues to make robust progress dealing with unprocessed tax returns,” Jodie Reynolds, a spokesperson with the IRS, mentioned in an announcement. 

“The stock numbers introduced within the Nationwide Taxpayer Advocate report are neither probably the most correct nor most up-to-date figures,” she mentioned. 

The company is processing extra returns in comparison with a 12 months in the past, and continues to make “substantial progress” on the backlog. There was “important new hiring,” whereas shifting current employees, requiring obligatory additional time and improved effectivity, Reynolds mentioned. 

“Basically, the IRS respects the vital position the Nationwide Taxpayer Advocate performs for taxpayers and tax administration, and we’ll carefully be reviewing the mid-year report,” she mentioned.

IRS plans to rent extra employees

The company in March shared plans to hire 10,000 workers, beginning with 5,000 new staff. Nonetheless, the IRS hadn’t but achieved half of the 5,000-worker headcount in Might, in accordance with Ken Corbin, the company’s chief taxpayer expertise officer.

“We stay targeted on doing every little thing potential to expedite processing of those tax returns, and we proceed so as to add extra folks to this effort as our hiring efforts proceed this summer time,” IRS Commissioner Chuck Rettig said in a press release this week.

As of June 10, the IRS had processed round 4.5 million of the greater than 4.7 million particular person paper returns from 2021, and the company expects to complete error-free individual filings from 2021 this week.

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