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IRS Still Tackling COVID-19-Induced Backlogs

S.J. Steinhardt
Published Date:
Nov 11, 2022

GettyImages-174879501 IRS Internal Revenue Service

Still coping with the lingering effects of the COVID-19 pandemic, the IRS reported delays in processing tax returns, payments, refunds and correspondence.

“As of November 4, 2022, we had 4.2 million unprocessed individual returns received this year," the agency said in a statement updated on Nov. 10. "These include tax year 2021 returns and late filed prior year returns. Of these, 1.9 million returns require error correction or other special handling, and 2.3 million are paper returns waiting to be reviewed and processed. This work does not typically require us to correspond with taxpayers, but it does require special handling by an IRS employee so, in these instances, it is taking the IRS more than 21 days to issue any related refund.”

The IRS said that it continues to process tax returns that need to be manually reviewed due to errors, prioritizing individual tax returns for which refunds are due first and processing returns reflecting tax owed last. The processing of returns that contain mistakes or missing information, or that are suspected of identity theft or fraud, may be delayed.

As of Nov. 5, the IRS had one million unprocessed Forms 1040-X (Amended Individual Tax Return) and is processing them in the order received. The processing could take up to 20 weeks. The agency also had 2.7 million unprocessed Forms 941 (Employer’s Quarterly Federal Tax Return) and approximately 281,000 Forms 941-X (Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund), Those Forms 841-X “cannot be processed until the related 941s are processed,” it said.

“The IRS deployed additional resources to address the processing backlog this year and aims to be “healthy” by year-end,” National Taxpayer Advocate Erin Collins wrote on her blog on Nov. 10, adding, “In recent weeks, the IRS has been processing between 900,000 to 1.1 million total individual and business returns per week and has about six weeks left before it shuts down its systems to prepare them for the upcoming filing season.”

“Currently, the IRS has about 4.5 million pieces of correspondence awaiting processing,” she wrote “Notably, many of these documents are scheduled to be worked by the customer service representatives (CSRs) who split their time during the filing season between answering phones and processing amended returns and correspondence.”

The IRS will use part of the $80 billion that it was appropriated under the Inflation Relief Act to hire 10,000 new employees, 4,000 of whom will be CSRs for the upcoming tax season.

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