When I was in college, I had a friend who never had to worry about money. I was not so lucky. One evening, when we were going back to the dorms, she suggested that we stay outside a little longer. I couldn’t, I told him, because I had no more money. She offered to go to the bank so I could withdraw more money from the ATM. I had to explain to him that there was nothing to withdraw from the ATM – I was literally out of money.
What looks like simple math isn’t always simple. Limits can be tricky to understand, especially when you’re not the one worrying about counting the money. It’s the same in government, as taxpayers have discovered over the past few years.
Most taxpayers know that the IRS is responsible for collecting tax revenue. In recent years, the agency has raised more than $3 trillion, accounting for 96% of the revenue needed to finance the government.
IRS budget woes
During the same period, refunds and recoveries increased, as did the number of returns filed. According to National Taxpayer Advocate Erin Collins report to Congressthe number of individual taxpayers served by the IRS has increased by about 19% since 2010, with the number of Form 1040s increasing from 142 million that year to about 169 million in 2021.
The IRS has also been tasked with administering several new programs, including issuing three rounds of stimulus checks and expanding child tax credit payments. Also on the IRS plate? Enforcing portions of the Affordable Care Act and reporting significant debtors to the State Department for passport revocation.
As the IRS’s to-do list grew, the agency was forced, as a former IRS commissioner
Congress increases funding
Last week, Congress passed a $1.5 trillion omnibus spending deal (HR 2471) that included a 6% increase for the IRS — the $675 million increase is the largest increase in funding the agency since 2001, according to the National Union of Treasury Employees. President
The IRS funding in the bill was for taxpayer services, including filing and account services, as well as money for the Taxpayer Advocate Service. Dollars have also been targeted for law enforcement, including criminal investigations for tax and financial crimes, and new technologies. And in a nod to the current IRS backlog, money has also been set aside to tackle the paper inventory of amended returns, correspondence, and adjustments to return returns. .
The size of the problem
On March 9, 2022, the Inspector General of the Treasury for Tax Administration published a report on the 2021 IRS filing season. They noted that “inventory backlogs from the 2020 filing season continued to affect the IRS’ ability to provide timely service to taxpayers during the 2021 filing season.”
How late was the agency? As of the end of the week of December 28, 2019, the IRS had 183,000 paper tax returns awaiting processing. At the same time in 2020, the agency had 3,540,486 paper tax returns waiting to be processed, an increase of 1,835%. In addition, 110,443 amended returns were pending processing at the end of 2019. At the end of 2020, this number had inflated to 1,477,911, an increase of 1,238%.
And that backlog has only grown. The taxpayers’ lawyer had noted in her report to Congress that the agency “was behind schedule even before the start of the 2021 filing season”. TIGTA’s report confirmed that the backlog stocks associated with the 2021 filing season were greater than those resulting from the 2020 filing season, warning: “The inability to process tax returns in a timely and to address the work on tax accounts will continue to have a significant impact on associated taxpayers. .
According to TIGTA, a significant obstacle to resolving the backlog was the lack of sufficient staff. As of May 18, 2021, the IRS had one hiring miss to win of 814 people simply needed to meet demand at its tax processing centers in Kansas City, Missouri, and Ogden, Utah, the two locations where the majority of personal and business returns are processed .
That’s not counting other hiring holes in law enforcement, technology, and customer service. These vacancies were also felt by taxpayers. TIGTA found that as of May 28, 2021, taxpayers had made a total of 185 million attempts to contact the IRS by calling the various toll-free customer service hotlines. The IRS only answered 11.4 million calls in person, and an additional 25.6 million calls were answered by automation. This means that around 150 million calls went unanswered.
But this latest boost to the agency’s budget could change that.
IRS touts job opportunities
With the promise of more money on the horizon, the Under Secretary of the Treasury
Adeyemo, in collaboration with the Commissioner of the IRS
The agency also plans to immediately begin filling positions at a new calling site in Mississippi. A dozen new employees are expected to staff the Automated Collection System (ACS) site, responding to calls from taxpayers.
More information about these IRS job opportunities can be found on the IRS careers website.
What happens after
The IRS is also taking advantage of new technologies, including automation, to reduce its workload. In the last production season, any error on a tax return required manual review, which meant that only a few dozen such returns could be processed each hour. For this filing season, the IRS is using a automated tool which he claims allows him to close 1.5 million error resolution cases in a single week.
There’s clearly a lot going on to try and clear up the backlog, putting delayed tax refunds in the hands of taxpayers and the revenue in government coffers. And while no one is suggesting that throwing money at the problem will make it go away, it should bring some much-needed relief.
Is this funding boost a trend? We’ll see. The omnibus provides money only until September this year. This means that in the fall we will start again. But for now, it’s a start.
This is a weekly column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest tax news, tax law and tax policy. Look for Erb’s column each week in Bloomberg Tax and follow her on Twitter at @taxgirl.