IRS Efforts to Clear Tax Return Backlog

Are you still waiting for your 2020 federal refund? Are you waiting for a response from the IRS to a letter you sent them last year? If you answered “yes” to either question, you are one of millions of taxpayers caught in the backlog of unprocessed returns and unanswered tax correspondence that is creating one of the most challenging tax filing seasons in our nation’s history.

The massive tax backlog was caused by a combination of COVID-19 shutdowns, staff shortages, and the additional workload to process COVID-related benefits passed by Congress. And that was on top of chronic IRS underfunding, anemic workforce growth, and outdated systems. Today, the IRS experiences historically low funding while they also administering one of the most complicated tax systems in the world.

It might seem kind of late, but on March 10th, the IRS announced an aggressive plan to end the pandemic tax return inventory by the end of 2022. The agency is taking a three-pronged, all hands-on-deck approach:

  • Hiring and Surging Thousands of Employees to Tackle the Backlog

The IRS plans to hold job fairs across the country to fill 5,000 open positions in the coming months, as well as an additional 5,000 new hires to be made by 2023. It is also creating new 700-person surge team to process new returns, amended returns, and answer taxpayer correspondence. They are also shifting 700 employees to three IRS processing centers. Interested in applying for an IRS job? Here’s the link: https://www.irs.gov/newsroom/irs-hiring-more-than-5000-positions-in-austin-kansas-city-ogden.

  • Increased Taxpayer Assistance to Reduce Processing Delays

Much of the backlog stems from small errors on millions of tax returns, requiring manual review by IRS employees before they can be processed. The IRS is stepping up efforts to help taxpayers file accurate returns by sending more than 100 million informational taxpayer letters, and providing additional help online, on the phone, and in-person. The IRS created and expanded self-service online portals for taxpayers and hired contractors to increase the capacity to answer taxpayer calls and staff offices for in-person assistance.

  • Developing and Deploying Updated Technology to Automate Functions

The IRS launched a new automated tool that reduces the need for manual review and correction. They also reconfigured systems to temporarily halt sending approximately 40 different notices to taxpayers and developed new automated support technology to help taxpayers with online live assistance and quickly answer taxpayer queries. More information about new IRS automation is here https://www.irs.gov/newsroom/irs-unveils-voice-and-chat-bots-to-assist-taxpayers-with-simple-collection-questions-and-tasks-provides-faster-service-reduced-wait-times.

This tax filing season is projected to be one of the most challenging in our nation’s history due to COVID-19 shutdowns and increased workload. The IRS is doing what is can with its limited funding to take a three-pronged all-hands-on-deck approach to meet the challenge.