More Evidence of the IRS’ Recent Struggles

• July 5, 2021
• Carey M. Heyman, CPA

National Taxpayer Advocate Erin Collins recently released her mid-year report to Congress, and much of it mirrored what was already covered in the Treasury Inspector General for Tax Administration’s interim report. According to Ms. Collins, the IRS struggled to complete their regular job functions during the COVID-19 pandemic, and that is without factoring in the three separate rounds of stimulus payments that Congress tasked them with administering. Ms. Collins said the following in her report: “The 2021 filing season was the quintessential definition of a perfect storm […] To state the obvious, this filing season has been challenging for tens of millions of taxpayers and anything but normal for the IRS and its employees.”

Some highlights from the National Taxpayer Advocate report included:

• At the conclusion of the 2021 filing season, a historically high number of taxpayers had not received their refunds.
• The IRS faced a backlog of 35 million individual and business income tax returns that required manual processing at the end of the 2021 filing season. This represented an increase of four times from the end of the 2019 filing season. The backlog included approximately 17 million paper tax returns awaiting processing, 16 million tax returns that were suspended during processing and required further review, and 3 million amended tax returns that were waiting to be processed.
• The IRS processed about the same amount of individual tax returns and issued approximately the same amount of refunds as the 2019 filing season.
• The IRS had not yet processed all of the paper tax returns and correspondence received during the 2020 filing season.
• The IRS received 167 million telephone calls during the 2021 filing season, which was over four times as many phone calls as received during the 2019 filing season. IRS employees could not keep pace with this high volume of calls, which resulted in the poorest service provided ever. A shockingly low, 9% of callers, were successful in reaching reach a live assistor.

Ms. Collins thought that many of these problems can be fixed, in part, by providing the IRS with more funding to improve staffing and technology. The Biden administration is hoping to increase funding to the IRS by $80 billion over the next 10 years.

Sources: National Taxpayer Advocate; Bloomberg Tax

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