Get ready for ‘frustrating’ tax season, as IRS battles historic backlogs and staff shortages

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Get ready for tax refund and filing delays this year, the Treasury warned, as the Internal Revenue Service starts tax season with a significant pandemic-borne backlog and faces ongoing staffing and funding shortages.

The IRS is confronting “enormous challenges” and taxpayers should gird themselves for a “frustrating season,” Treasury Department officials said Monday.

The IRS is starting filing season with 6 million unprocessed returns from the previous year, about 5 million more than usual.

“Covid has caused additional problems,” Erin Collins, the national taxpayer advocate told NBC News. “If you have an issue with your return, you will experience delays.”

Covid has caused additional problems. If you have an issue with your return, you will experience delays.

The agency has been facing staff shortages, with fewer than 15,000 workers handling 240 million calls last year. Its workforce is the same size as it was in 1970, with a budget 20 percent lower than it was 10 years ago.

Tax preparers say they’ve been unusually stymied this past year as they try to get returns processed.

“Between complete shutdowns of offices and processing centers since Covid began, to automatic voicemails when calling special practitioner-only helpline numbers, to most IRS audit and collection cases being in backlog mode, we are patiently waiting for IRS budget shortfalls to be funded by Congress so taxpayers can get their refunds quickly and be able to communicate with the IRS in a relatively stress-free fashion when they receive an IRS notice or letter,” said Harvey Bezozi, a CPA and financial strategist.

Paper returns pose a special challenge, as IRS agents are required to be in the building to process them. Covid and social-distancing measures limit the number of employees who can be physically on-site, further slowing the process.

“Paper is the IRS’s Kryptonite, and the agency is still buried in it,” the national taxpayer advocate said in its annual release.

Paper is the IRS’s Kryptonite, and the agency is still buried in it.

The report noted that last year the IRS “Where’s my refund?” tool often lacked information on unprocessed returns and gave no reason for delays or course of action for taxpayers. Telephone service at the agency was at its “worst,” with only 11 percent of callers getting their questions answered, the report noted.

The advocate recommended the agency employ scanning technology for paper returns and use a “customer callback” system for phone lines and allow customers to communicate securely with the IRS by email to improve customer service.

The agency received $2 billion in funding as part of President Joe Biden’s American Rescue Plan, and the 2022 proposed budget calls for a 15 percent increase in IRS funding. The administration has also earmarked $80 billion for the IRS over 10 years as part of the Build Back Better act. The measure has passed in the House but stalled in the Senate.

Experts say that to get a refund and return processed as swiftly as possible, taxpayers should file early, file online, triple check for errors, and choose direct deposit.

If you must file a paper return, file it expeditiously, as they are processed in the order received.

But if you do experience a delayed refund, there is a silver lining: It will earn interest.



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