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IRS has backlog of 35 million tax returns; staffing, broken printers part of problem, report says

Tax Season Begins
Posted at 2:48 PM, Jun 30, 2021
and last updated 2021-06-30 17:58:34-04

For those who have not received their tax refund on their 2020 tax filing, you are not alone. The Internal Revenue Service has a backlog of about 35 million tax returns, according to a recent report.

About two-thirds of those, roughly 23 million, are tax returns belonging to individuals, the report from the Taxpayer Advocate Service says. The remaining are business tax returns.

The group is an independent organization within the IRS and filed their report with Congress.

The IRS knew it would be a challenging year; the realities of working during a pandemic, starting the calendar year with a backlog of almost 12 million 2019 returns to resolve, mailing out stimulus checks, combined with last-minute tax changes from Congress passed as pandemic relief measures. Additionally, the agency has seen its budget shrink over the past decade.

"This filing season was the quintessential definition of a perfect storm,” wrote Erin Collins, the national taxpayer advocate in the report. “To state the obvious, this filing season has been challenging for tens of millions of taxpayers and anything but normal for the IRS and its employees.”

The report shows only about 9% of people who called the IRS seeking clarification on the new tax laws or to ask questions were ever able to reach a live person to get the help they needed.

In addition, there are about 5 million returns under manual review because there are discrepancies in how much the person is claiming for their stimulus payments - both those who did not receive a check they believed they should and those who think they should be paid more because they lost their job or had other life changes.

Another 2 million returns are being held up because they were flagged as possible identity theft. This number has more than doubled from the 800,000 flagged returns in 2019.

The ongoing budget cuts, roughly 20% over the last ten years, has left the IRS with old technology and a smaller staff, according to the report.

Specifically, the Taxpayer Advocate Service cites a finding that 42% of the printers and copiers used for IRS processing functions were broken as of March 2021.

They also estimate without changes, the IRS could lose more than 30% of their workforce in the next year.

In response to the report, the IRS told CNN it has made improvements to streamline hiring and continues to improve telephone services for taxpayers.