Unprecedented IRS refund delays

The IRS has an even larger backup of tax returns this year than it did a year ago.

The National Taxpayer Advocate announced that people are experiencing longer delays in processing paper returns and longer wait times on the phone than a year ago. The National Taxpayer Advocate is an independent watchdog within the IRS.

The National Taxpayer Advocate is required to submit a report on taxpayer challenges twice a year. The report contains proposals to lawmakers.

“That the backlog continues to grow is deeply concerning, primarily because millions of taxpayers have been waiting six months or more to receive their refunds,” said National Taxpayer Advocate Erin Collins. “Before the pandemic, the IRS typically delivered refunds to paper filers within four to six weeks.”

“Had the IRS used some of the $1.5 billion of additional funds provided by the American Rescue Plan Act of 2021, which was enacted 15 months ago, to hire and train additional employees, it could have worked through backlog,” the report said.

Collins also criticized the IRS for not investing in scanning technology to speed up processing.

“The digits on every paper return must be manually keystroked into IRS systems by an employee,” Collins said. “In the year 2022, that doesn’t just seem crazy. It is crazy.”

Collins said the IRS is trying to hire in locations where paper returns are being transcribed, but that work is only done in Austin, Kansas City, and Ogden, Utah. “The IRS is having difficulty hiring in those cities,” Collins said.

The IRS aimed to bring in 5,473 new employees to process returns. However, just 2,056 employees were hired.

According to the report, the IRS had a backlog of 21.3 million unprocessed paper tax returns at the end of May. The backlog increased by 1.3 million over the same time last year.

The National Taxpayer Advocate report also said that a customer service representative answered only 10% of taxpayer calls last year. Phone wait times have increased by nine minutes compared to last year.

Jodie Reynolds, a spokesman for the IRS, said the report’s numbers “are neither the most accurate nor most recent figures.” She also said, “Today, the IRS is running well ahead of tax return processing compared to a year ago,”

The IRS has been urging people to efile for many years because processing paper returns is time-consuming and can bog down their limited staff.

Even though paper returns were experiencing long delays, 17 million taxpayers mailed their returns. Additionally, businesses filed 21 million returns on paper.

Efiling your return can eliminate unnecessary delays in receiving your refund.

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David Zubler is a tax accountant and Enrolled Agent in East Tennessee, providing tax strategies and representing clients before the IRS and has over 25 years of tax experience. He is the author of six tax books and has shared tax advice on national TV. He is the founder and president of Your Tax Care. The company provides business and tax education, including David’s one-minute tax tip radio recordings at YourTaxCare.com. David can be reached at (865) 363-3019 or contacted by email at david@yourtaxcare.com.