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

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

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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 workers and, most significantly, taxpayers,” wrote National Taxpayer Advocate Erin Collins, who leads the impartial 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 workers to processing features, it may have decreased the stock backlog carried into this submitting season and accelerated the fee 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 quicker to make use of a part of the $1.5 billion funding from the American Rescue Plan of 2021 to rent new workers, the report mentioned.

CNBC has reached out to the IRS for remark.

IRS plans to rent extra employees

The company in March shared plans to hire 10,000 workers, beginning with 5,000 new workers. 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 centered on doing every little thing attainable to expedite processing of those tax returns, and we proceed so as to add extra individuals 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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