Hobbled by antiquated technology, staff shortages and a dearth of automated systems, the IRS had a backlog of 21.3 million paper returns at the end of May, up from 20 million a year earlier, when backlogs started to pile up in the aftermath of COVID-19, according to a report by Erin M. Collins, national taxpayer advocate at the Taxpayer Advocate Service, an independent organization within the IRS. Currently, every digit on a paper return must be manually keystroked into IRS systems by agency workers, a process that Collins referred to as “crazy” in the tech-driven world we live in.
In the report, Collins wrote: “When I released my Annual Report to Congress six months ago, I wrote that ‘Paper is the IRS’s Kryptonite, and the agency is still buried in it.’ Fast forward to this Objectives Report: It’s Groundhog Day.”
Along with waiting longer for their refunds, taxpayers are experiencing lengthy delays in responses from the IRS. Through May 21, the IRS processed 5 million responses to Americans’ proposed adjustments to their returns, taking an average of 251 days to do so; that’s up from 74 days in fiscal year 2019, the most recent non-pandemic year. And so far in the 2022 tax-filing season, the agency has received 73 million calls from taxpayers but have answered just 10 percent of those calls (a tad better than the 9 percent in the 2021 season).
Back to normal?
The IRS says it is committed to reducing the backlog of paper returns to a “healthy" level by the end of the year. And there are signs of progress. The unflattering report from the national taxpayer advocate was published a day after the IRS announced that it would finally erase last season’s backlog by the week ending June 24.
Americans who file returns electronically have enjoyed a much better experience. Electronic returns without errors have been processed within eight to 21 days, according to the Associated Press, citing a letter from the IRS and the U.S. Treasury Department addressed to Sen. Ron Wyden (D-Ore.), the chairman of the Finance Committee.