WASHINGTON—The Internal Revenue Service significantly shrank its backlogged pile of tax returns during 2022 but still faces a challenging tax-filing season ahead, according to a report released Wednesday.
As of Dec. 9, 2022, the IRS had 1 million individual returns and 1.5 million business returns awaiting processing, according to the report from
Erin Collins,
the national taxpayer advocate, who runs an independent taxpayer-assistance operation inside the IRS. By Dec. 23, the IRS had lowered those figures to about 400,000 and 1 million. Those totals are down from 4.7 million unprocessed individual returns and 3.2 million business returns as of Dec. 31, 2021, after a combination of pandemic-era closures and new tax-code provisions slowed the agency’s work.
A broader look at IRS inventory requiring manual processing—including amended returns, error corrections and correspondence—shows a decline to about 14 million items in late December 2022 from 22.3 million on Dec. 31, 2021, according to the taxpayer advocate’s office. The slower the IRS moves, the longer taxpayers must wait to get refunds or resolve lingering questions.
“The bad news is that taxpayers and tax professionals experienced more misery in 2022,” Ms. Collins wrote in her annual report. “We have begun to see light at the end of the tunnel. I am just not sure how much further we need to travel before we see sunlight.”
The backlogs will be one of the first challenges facing
Danny Werfel,
President Biden’s pick to run the IRS, if he’s confirmed by the Senate. Congress approved $80 billion last year to expand the agency over the next decade, and the agency is slated to release a strategic plan for that spending soon. Both parties support the IRS keeping the portion of that funding designated for customer service, even as Republicans try to repeal the agency’s new enforcement money.
The Treasury Department said Wednesday that the IRS has reached its goal of hiring 5,000 customer-service representatives using the new money. Officials have promised that this filing season, taxpayers will be much more likely to get their calls answered.
“Better service for the American people is critically important so families and small businesses can receive refunds on time, access credits, and get the information they need to file an accurate return,” Deputy Treasury Secretary
Wally Adeyemo
said.
In 2022, by one measure in Ms. Collins’s report, 13% of taxpayers’ calls were answered by a live person, alongside a 16% answer rate for the priority service for tax practitioners. The agency typically begins accepting individual tax returns in late January, though it hasn’t announced a date.
The IRS struggled during the coronavirus pandemic to keep pace with changing laws that increased error rates on tax returns. Electronic filings generally move smoothly through the tax agency’s systems, while anything that requires human hands got bogged down. That included returns filed on paper and cases where the computers flagged problems or mismatches.
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What is your outlook for the IRS this tax season? Join the conversation below.
The IRS currently takes about a year to process identity-theft cases, a delay that Ms. Collins called unacceptable. During fiscal year 2022, the agency took an average of 193 days to process certain taxpayer correspondence, more than twice what it did in 2019.
Charles Rettig,
the IRS commissioner until November 2022, made clearing the backlogs a priority. The agency hired thousands of workers at its paper-processing sites in Utah, Missouri and Texas, and it diverted some workers from answering phone calls to moving paper.
“The IRS made the right strategic decision in doing this, as the backlog continues to decrease and the IRS starts the 2023 filing season in a far better position,” Ms. Collins wrote, “but the resulting impact on telephone service was incredibly frustrating for taxpayers, tax professionals, and employees.”
Write to Richard Rubin at richard.rubin@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
WASHINGTON—The Internal Revenue Service significantly shrank its backlogged pile of tax returns during 2022 but still faces a challenging tax-filing season ahead, according to a report released Wednesday.
As of Dec. 9, 2022, the IRS had 1 million individual returns and 1.5 million business returns awaiting processing, according to the report from
Erin Collins,
the national taxpayer advocate, who runs an independent taxpayer-assistance operation inside the IRS. By Dec. 23, the IRS had lowered those figures to about 400,000 and 1 million. Those totals are down from 4.7 million unprocessed individual returns and 3.2 million business returns as of Dec. 31, 2021, after a combination of pandemic-era closures and new tax-code provisions slowed the agency’s work.
A broader look at IRS inventory requiring manual processing—including amended returns, error corrections and correspondence—shows a decline to about 14 million items in late December 2022 from 22.3 million on Dec. 31, 2021, according to the taxpayer advocate’s office. The slower the IRS moves, the longer taxpayers must wait to get refunds or resolve lingering questions.
“The bad news is that taxpayers and tax professionals experienced more misery in 2022,” Ms. Collins wrote in her annual report. “We have begun to see light at the end of the tunnel. I am just not sure how much further we need to travel before we see sunlight.”
The backlogs will be one of the first challenges facing
Danny Werfel,
President Biden’s pick to run the IRS, if he’s confirmed by the Senate. Congress approved $80 billion last year to expand the agency over the next decade, and the agency is slated to release a strategic plan for that spending soon. Both parties support the IRS keeping the portion of that funding designated for customer service, even as Republicans try to repeal the agency’s new enforcement money.
The Treasury Department said Wednesday that the IRS has reached its goal of hiring 5,000 customer-service representatives using the new money. Officials have promised that this filing season, taxpayers will be much more likely to get their calls answered.
“Better service for the American people is critically important so families and small businesses can receive refunds on time, access credits, and get the information they need to file an accurate return,” Deputy Treasury Secretary
Wally Adeyemo
said.
In 2022, by one measure in Ms. Collins’s report, 13% of taxpayers’ calls were answered by a live person, alongside a 16% answer rate for the priority service for tax practitioners. The agency typically begins accepting individual tax returns in late January, though it hasn’t announced a date.
The IRS struggled during the coronavirus pandemic to keep pace with changing laws that increased error rates on tax returns. Electronic filings generally move smoothly through the tax agency’s systems, while anything that requires human hands got bogged down. That included returns filed on paper and cases where the computers flagged problems or mismatches.
SHARE YOUR THOUGHTS
What is your outlook for the IRS this tax season? Join the conversation below.
The IRS currently takes about a year to process identity-theft cases, a delay that Ms. Collins called unacceptable. During fiscal year 2022, the agency took an average of 193 days to process certain taxpayer correspondence, more than twice what it did in 2019.
Charles Rettig,
the IRS commissioner until November 2022, made clearing the backlogs a priority. The agency hired thousands of workers at its paper-processing sites in Utah, Missouri and Texas, and it diverted some workers from answering phone calls to moving paper.
“The IRS made the right strategic decision in doing this, as the backlog continues to decrease and the IRS starts the 2023 filing season in a far better position,” Ms. Collins wrote, “but the resulting impact on telephone service was incredibly frustrating for taxpayers, tax professionals, and employees.”
Write to Richard Rubin at richard.rubin@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8