The IRS took in trillions of dollars and distributed billions in refunds and other outlays, accord to its recently recent issued report. Yet it remains plagued by deficiencies in taxpayer service, tax refund delays and backlogs of unprocessed returns, according to a recent report, issued by the Government Accountability Office.
The IRS received more than $4.9 trillion in tax revenue, and distributed $642 billion in federal tax refunds and other outlays, its Fiscal Year 22 Agency Financial Report stated, “maintain[ing] an unmodified (clean) financial statement audit opinion for the 23rd consecutive year,” as former Commissioner Charles Rettig wrote in his opening message.
“The truly transformational investment in the recently passed Inflation Reduction Act of 2022 (IRA) provides nearly $80 billion to the IRS through FY 2031 for increased enforcement, investments in information technology modernization and improvements to taxpayer services,” he wrote.
That investment seems to be needed, as a Government Accountability Office report’s title summed up the agency’s problems: Backlogs and Ongoing Hiring Challenges Led to Poor Customer Service and Refund Delays in the 2022 tax filing season.
“In its third filing season since the COVID-19 pandemic began, the Internal Revenue Service (IRS) prioritized processing its backlog of tax returns but its current inventory of unprocessed returns remains high,” the report read. “At the end of 2021, IRS had a backlog of about 10.5 million paper returns and returns stopped for errors. ... However, as of late September 2022, IRS had about 12.4 million returns to process, resulting in refund delays for millions of taxpayers. GAO previously recommended that IRS improve paper processing by digitizing more paper returns and addressing barriers to e-filing.”
The report found that the IRS reduced its prior-year backlog of taxpayer correspondence from about 5 million to about 400,000 between January and September 2022 through a combination of strategies such as reassigning staff from answering phones to processing correspondence. Yet that move resulted in only one in five calls being answered during the filing season.
As of September 2022, IRS met its hiring goals for fiscal year 2022 through a combination of direct and traditional hiring, aided by its direct hire authority. However, that authority to make on-the spot job offers did not start until a month after the filing season began, resulting in about 95 percent of the direct hires not starting work until after the 2022 filing season ended.
“IRS officials said their recent hiring efforts will help prepare IRS for a strong 2023 filing season,” the report read.
The GAO noted that 13 previous recommendations to IRS and the Department of the Treasury, and three previous recommendations to Congress, to improve returns processing and customer service performance remain unimplemented.
“Taxpayer service remains the most significant IRS priority, and we have implemented many new, innovative strategies to improve our overall level of service and processing of our unprecedented current and projected inventories,” Melanie Krause, the IRS's acting deputy commissioner for services and enforcement, wrote in response to the GAO report, according to Accounting Today. “The pandemic presented the IRS with a confluence of novel and critical demands at a time when we lacked the stable, long-term funding needed to appropriately serve the American people. Given these significant challenges, although we may not have always met our goals for timeliness or level of service available to meet demand, our employees have worked extremely hard to respond as best we could to a never-ending string of compounding challenges. With the recent infusion of long-term funding provided by the Inflation Reduction Act of 2022, we are diligently working to ensure our level of service returns to and exceeds pre-pandemic levels in the upcoming 2023 filing season.”