- Although understaffed and underfunded, the IRS is nevertheless working to clear its backlog of tax returns.
- Due to the backlog, many returns went months without being processed, which caused refund checks to be delayed.
- The IRS said on Tuesday that it will finish processing the original returns submitted in 2021 this coming week.
As the overworked and underfunded agency grappled with a historic backlog of unprocessed tax returns that accumulated amid increased pandemic obligations, heaps of paper have been the IRS’s recurring theme over the last year.
The IRS is now making a significant move to process and distribute such returns: It will finally finish processing the eight million initial returns that were filed in 2021 this week. Original returns are the 1040 tax returns that individual taxpayers file each year; the IRS will deal with the backlog this week, which includes files without problems. The organization has also had to deal with a backlog of modified returns when filers are required to provide more information to finish their return after filing.
For Americans who have been waiting for refund cheques, the backlog reduction might be good news. Since 75% of filers receive refunds each year, the backlog has resulted in significant check delays, especially for those who file paper returns.
Erin Collins, a national taxpayer advocate, claims that in the past, filers had to wait months for their returns to be completed. As of the end of 2021, “many” taxpayers had been waiting for refunds for nine months, according to Collins’ annual report to Congress, as the organization battled with piles of paper returns and communications.
Collins stated in her announcement of the study that “paper is the IRS’s Kryptonite, and the agency is still buried in it.”
American consumers’ wallets are aware of the delay in processing returns and, consequently, in receiving refund cheques. Previous filers who are still awaiting payments told Insider that they were having trouble paying for daycare, groceries, and even their houses.
The backlog and delays are the results of an agency that is overworked and has witnessed a reduction in money and staff. The IRS’s funding has decreased by more than 20% over the past ten years, while personnel has decreased by 17% and the agency’s workload has increased. The organization is “horrendously under-resourced,” according to Treasury Secretary Janet Yellen. Tax examiner Shawn Gunn of the IRS’s Kansas City office previously told Insider that staff members were working hard to send taxpayers their returns while simultaneously coping with offices filled with boxes of paper, no staples, and 1960s-era equipment.
The IRS previously announced an all-hands-on-deck strategy that includes adding 10,000 extra employees and assembling a surge team to handle returns process returns and send checks out.
These efforts were fruitful. IRS Charles Rettig and Deputy Treasury Secretary Wally Adeyemo stated in a letter to numerous members of Congress that the agency has hired over 1,500 new employees and that submission processing staff have logged 500,000 hours of overtime this year.
By the end of the year, the agency is still on schedule to achieve healthy levels of inventory, which would entail going into the next filing season with no original returns still pending processing. But as a result, 2022 paper returns that would have been processed previously in a typical year are now waiting to be processed.
Additionally, the IRS still has a ton of paper. The cafeteria at the IRS’s Austin location was “overrun by paper returns,” according to a photo posted on June 11 by Natasha Sarin, a tax policy and implementation consultant at the Treasury Department.
- IRS Clears the Backlog From Last Season, but Still Fears a Crush in 2022
- Thousands of New Employees Are Being Hired by the IRS. They’re Almost Caught Up on 2021 Returns
Sarin told Insider that purposefully depriving the IRS of resources “shortchanges American taxpayers without a doubt.” “With outdated technology and personnel levels from the 1970s, dedicated IRS employees are making progress on the massive paper backlog. It’s time to provide the reliable resources a modernized IRS needs to serve every American.”