IRS pledges to overcome challenges from overburdened tax season

Posted by Jeffrey Siegel on April 30, 2022

Internal Revenue Service Commissioner Charles Rettig told lawmakers the IRS has been working hard this past filing season during a congressional hearing Thursday as he heard first-hand testimony from their constituents about the problems they encountered.

“IRS employees want to do more to help taxpayers,” he said in his opening statement. “We want to be able to answer the phones and respond to questions. We want to be ready, whenever crisis hits, to deliver economic relief quickly — as our employees demonstrated repeatedly during the current pandemic, working long hours to deliver crucial programs. During this challenging period, the IRS has been operating in an ‘all-hands-on deck’ approach, leaving nothing off the table for consideration to improve overall service.”

National Taxpayer Advocate Erin Collins spotlighted the continuing problems she has been seeing. “The biggest problems taxpayers encountered last year – and are continuing to encounter this year – were return processing delays, correspondence processing delays, difficulty reaching the IRS by telephone, and the inability to obtain information from the IRS’s Where’s My Refund? and Where’s My Amended Return? Tools,” she said in her opening statement.

During her annual report to Congress, she called attention to the lingering problems with processing paper tax returns, which became especially acute during the early months of the pandemic in 2020 when many IRS facilities were closed and unopened mail stacked up in storage. “Paper is the IRS’s kryptonite,” said Collins. Even though the IRS has been catching up on its backlog of millions of tax returns from last year and is down to 2.9 million paper returns received in 2021, new returns and correspondence are piling up this tax season. Collins said that as of April 8, 2022, the IRS had in its inventory about 20.9 million tax returns and about 5.3 million pieces of taxpayer correspondence and accounts management cases.

Through April 8, the IRS processed more than 99 million individual federal tax returns and issued more than 70 million refunds totaling more than $222 billion. “While the filing season has presented no major disruptions or surprises, we know we have a great deal of work to do in many other areas of the IRS,” said Rettig. “The IRS continues to focus on working to reduce paper correspondence inventory and process paper tax returns from 2021 as well as improve our response to an unprecedented level of phone demand — situations that have been compounded by the pandemic and related issues.”

He noted that in fiscal year 2021, the IRS received more than 15 million individual paper returns and had a significantly higher error rate on individual returns mainly due to challenges associated with reconciling funds received through stimulus programs like Economic Impact Payments. The IRS received far more than 10 million returns where taxpayers didn’t properly reconcile the two EIPs received in 2020 against the amount of the Recovery Rebate Credit stated on the tax return they filed in 2021. Similarly, more than 10 million individuals reported unemployment compensation on their return that was subject to the exclusion enacted by Congress during the 2021 filing season. In addition, millions of taxpayers elected to use 2019 rather than 2020 as the base year for determining their Earned Income Tax Credit, a legislative change by Congress that was enacted after the IRS’s technology development for the 2021 filing season had been completed, Rettig pointed out. Each of those returns required manual review and resolution by an IRS employee.

“Congress, at a minimum, must resource the IRS appropriately — and then hold IRS leadership accountable for making sure those resources are properly deployed to provide the American people the level of service they deserve from this vitally important agency,” said Rep. Gerald Connolly, D-Virginia, who chaired the hearing.

Even though Congress has been putting these obstacles in the way, lawmakers took the IRS to task for failing to help constituents who had spent hours on the phone trying to reach the agency for help. Mike Solomon, a resident of the District of Columbia, said in a video played by one of the lawmakers about how he had filed his taxes through TurboTax, but received no refund from the IRS after months went by nor any further information.

“I repeatedly checked the IRS website for status updates, but received nothing but a generic message saying my return had been received and was being processed, but nothing else,” he said. “Eventually after months of no information, I attempted to contact the IRS via email, but got no reply to my message. I then was able to find phone number but called and found myself in a maze of response that always ended up with either being disconnected or left at a voicemail box where I couldn’t leave a message. In the meantime, I am currently in between jobs and have three kids at home, so the money from my refund would go a long way toward helping my family, but I still have no information as to where things stand and when I might be able to receive that money.”

His story is not an outlier, noted Rep. Eleanor Holmes-Norton, D-District of Columbia, pointing to a new report from the Government Accountability Office. “In the 2021 filing season, the IRS received 199 million calls, more than four times more calls than the agency received in 2019, two years ago,” she said. “At the end of the 2021 tax-filing season, the IRS had 5.9 million pieces of unanswered correspondence, nearly three times more than the 2 million pieces in 2019. And as Mike described, GAO also found that the ‘Where’s My Refund’ tool is not actually helpful in explaining why a refund is delayed.”

Rettig pledged to help taxpayers who were experiencing such delays and he offered to give his cell phone number to lawmakers to contact him on behalf of their constituents. In one of the other videos, a young mother discussed how her congressional representative had finally helped her get through to the IRS after being unable to reach anyone there by phone on her own, but she was still awaiting her much needed refund.

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