Tens of millions of U.S. taxpayers might face delays in having their tax returns processed by the Inner Income Service and in receiving their refunds, the nation’s taxpayer advocate on Tuesday testified earlier than Congress.
Erin Collins, the IRS’ taxpayer advocate, attributed the looming delays to “unprecedented” backlogs of unprocessed returns from final 12 months. That logjam has put the IRS in “a deep gap” to begin the 2022 tax season, she instructed the Home Methods and Means Committee.
“This previous 12 months has been essentially the most difficult for taxpayers and tax practitioners I’ve ever skilled,” she mentioned. “Tens of millions of taxpayers are nonetheless ready for his or her refund from final 12 months…. There are tens of millions of tax returns and items of correspondence that the IRS obtained final 12 months however couldn’t course of.”
Collins instructed the Methods and Means Committee that the pandemic contributed to the backlogs as a result of the company was pressured to quickly shut down processing facilities in 2020. It fell “behind on its inventories, and it’s nonetheless struggling to catch up,” she mentioned, including the company was pressured to divert employees to manage COVID-19 reduction applications enacted by Congress.
The vast majority of the pileup stems from individuals submitting paper returns, she instructed the panel’s subcommittee on oversight. The company final 12 months had a backlog of about 35.3 million returns, roughly half of which had been unprocessed paper returns, she mentioned. Such returns can take months to course of, she mentioned.
In contrast, Collins mentioned, about 90% of the 170 million tax returns filed electronically had been processed with minimal delays.
“Paper is the IRS’ kryptonite, and the company is buried in it,” Collins mentioned. “Paper stays on the coronary heart of the company’s challenges in processing tax returns.”
As of December 2021, the company was nonetheless working via a backlog of 6 million unprocessed particular person paper returns, she mentioned.
She additionally famous that taxpayers might not get a lot assist from the IRS if they’ve questions. Solely 11% of the 282 million calls positioned to the IRS had been answered by customer support representatives, she mentioned. “Because of this, most callers couldn’t acquire solutions to their tax regulation questions, get assist with account issues,” she testified.
Collins mentioned fixing the issues would require Congress to offer the IRS with extra funding and personnel. The IRS’ workforce has shrunk by 17% since 2010 whereas its workload has jumped by practically 20% throughout that very same interval.
Rep. Lloyd Doggett (D-Texas), a member of the panel, mentioned Collins was appropriate in urging extra funding for the IRS to make sure it might correctly course of returns and audit rich taxpayers and companies.
“This lack of sources will not be an accident,” Doggett mentioned. “It was intentional by those that needed IRS to fail.”
“Not solely does IRS not have sufficient employees to course of the returns on time or to reply the calls, it additionally lacks the sources to make sure that those that are up on the high” are correctly audited, he mentioned.
Rep. Greg Murphy (R-N.C.) argued that the IRS was failing at its job. If it had been a non-public enterprise, he mentioned, it could “be submitting chapter now.”
“There are clearly some main, main points that should be fastened, and stuck yesterday,” Murphy mentioned. “I don’t suppose the IRS must be bailed out with cash…. It’s about working the enterprise appropriately.”
