Tax season is about to start. The IRS is already facing a backlog
Tax filing season for 2021 tax returns will begin on Monday, January 24, 2022, the Treasury Department announced Monday. But amid the ongoing pandemic and a lack of resources at the Internal Revenue Service, Treasury officials warn it's going to be a challenge with taxpayers and tax preparers facing a frustrating filing season.
Normally, the IRS would have fewer than 1 million items to address in the backlog entering the tax filing season, but due to complications from the coronavirus pandemic, that's not the case this filing season. Treasury officials did not give an exact number for the backlog but said it was significant, several times more than 1 million.
The IRS is continuing to play catch-up from the height of the pandemic. In 2020, mail centers were shut down for a month. Meanwhile, more than 20% of the IRS customer service workforce has been unable to work due to health reasons related to the pandemic over the last two years.
At the same time, the IRS faces shrinking resources: Over the past decade, the IRS budget has been slashed by nearly 20%. During the last administration, staffing for Taxpayers Assistance Centers also decreased to the point where less than a third as many taxpayers are able to receive face-to-face assistance from the IRS than in 2016.
According to Treasury officials, the IRS workforce is now the same size it was in 1970, despite the population growing by 60%. The processing technology dates back to the 1960s. And there are also fewer auditors than at any time since World War II.
"In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees and for me," said IRS Commissioner Chuck Rettig. "IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us."
Treasury officials are urging taxpayers to get their tax returns in as early as possible. Taxpayers do not need to wait until previous returns to process to submit their 2021 returns. Tax filing season will run through April 18, 2022.
Officials are encouraging taxpayers to file electronically with direct deposit to help ensure issuing refunds do not face processing delays. They're also urging taxpayers to check for accuracy when filing – especially making sure to report accurate stimulus payment amounts received and advanced child tax credit payments – to avoid delays.
If they choose direct deposit and there are no issues with the tax return, the IRS anticipates most taxpayers will receive their refund within 21 days of when they file electronically.
Reaching the IRS to answer questions will continue to be a challenge this year, the agency said. In the first half of 2021, there were fewer than 15,000 people to handle more than 240 million calls made, which breaks down to one person per 16,000 calls. Last year, the IRS was able to answer less than 30% of calls it received, according to Treasury officials.
The IRS has been working to create more online tools and resources for taxpayers to help answer questions, which officials have been encouraging taxpayers to use.
The Biden administration is pushing for more money and resources to help the IRS. The agency received $2 billion as part of the American Rescue Plan passed last March. The proposed 2022 budget called for increasing IRS funding by nearly 15%.
Meanwhile, the Biden administration has included $80 billion in money for the IRS over the next decade as part of the Build Back Better Act, which would focus largely on tax enforcement but also on taxpayer services. That provision as part of much larger legislation was able to pass in the House, but has hit a wall in the Senate.