<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1655835538210,"cms.content.publishUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1655835538210,"cms.content.updateUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_55821854", "obj": {"id":"27789","width":"16","height":"9","video":"1034267"} }); ","_id":"00000181-877d-df44-ad8b-c77f2c850000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedThe IRS announced that it is on the cusp of processing all error-free individual tax returns from 2021, although it still is grappling with millions of returns from this year.
Internal Revenue Service Commissioner Charles Rettig sent a letter to congressional tax committees on Tuesday, revealing that the backlog of returns from last year will be cleared up by the end of the week. Rettig noted that the IRS entered this filing season with a backlog of some 8 million original unprocessed returns from 2021.
“Business returns filed in 2021 will be completed shortly thereafter, and the IRS will continue to work quickly to resolve the few remaining 2021 individual returns that have errors,” Rettig said.
A Treasury official told reporters during a Tuesday phone call that the IRS has made significant progress both processing last year’s claims and handling claims filed in 2022. The official said that the IRS has already processed about a million more returns from 2022 than it had at this point last year.
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Despite the progress, the official said there is still much more to do and that there are still millions of taxpayers waiting for returns that were filed this year to be processed. The IRS’s goal is to return to healthy levels of inventory by the end of 2022.
Workers who process original returns have logged about a half million hours of overtime this year, and some 2,000 employees have shifted from other parts of the IRS to assist with processing returns, according to the agency.
The Treasury official said the root cause of the backlogs and problems facing the IRS is decades of underfunding. Had the agency had more funding, the IRS would not have had the backlogs it experienced during the past couple of years, the official claimed.
The pandemic has additionally caused problems with the processing of tax returns.
Rettig told lawmakers that the agency, which has a workforce as small as it was in the 1970s, faced employee shortages due to personal and familial struggles with COVID-19. He said the IRS had held several recruiting events over the past four months, resulting in 3,000 job offers.
“What the agency requires to avoid a crisis like this in the future is sustained, multiyear funding to invest in overhauling antiquated technology, improving taxpayer service, and increasing voluntary compliance,” Rettig said.
The Treasury has been asking Congress for $80 billion more in funding over the next decade. The request was part of President Joe Biden’s Build Back Better spending plan, which fell apart when it became clear that key centrist Democrats would not end up voting in favor of the ambitious proposal.
The administration has claimed it can raise $700 billion in revenue over 10 years through that $80 billion in added funding alone.
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The Congressional Budget Office found that if lawmakers authorized the $80 billion, it would grow the IRS budget by more than 90% by 2031. Additionally, the spending would be expected to double the IRS’s staff.
“The IRS knew walking into this filing season that it did not have the workforce or technology in place to serve the American people the way they deserve — to pick up the phones when taxpayers call, to help them access all the credits and benefits to which they are entitled, and to ensure that each and every taxpayer receives their refund quickly,” said Natasha Sarin, the Treasury Department’s counselor for tax policy, in April.
