Over 35M tax returns unprocessed as IRS struggles, watchdog says

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The Internal Revenue Service was still facing a backlog of more than 35 million unprocessed tax returns as of the end of the 2021 filing season in May — a pileup more than four times bigger than the end of the 2019 filing season, according to a government watchdog.

The National Taxpayer Advocate found in its annual Objectives Report that the most recent tax filing season “was perhaps the most challenging filing season taxpayers, tax professionals, and the IRS have ever experienced.”

The watchdog said the agency had 35.3 million unprocessed returns at the end of the 2021 filing season, up more than four-fold from the 7.4 million unprocessed returns the agency had at the end of the 2019 filing season.

The watchdog also noted that most taxpayers are entitled to a refund. This filing season, 70 percent of individual income tax returns received refunds, with an average refund of $2,827, the NTA said.

But with a record number of unprocessed returns, Americans are scrambling to get answers from the IRS.

“The IRS received more telephone calls this filing season than in any previous filing season, and at one point in the height of filing season, the IRS received over 1,500 calls per second,” the NTA said in its report.

The agency received more than 85.1 million calls to its critical 1040 customer support phone line for individual tax returns in the 2021 season, the watchdog said. That’s up a staggering 978 percent from 2018 levels, it added.

Of the millions who called the agency over the past year, just 3 percent were able to connect with a human being, the NTA found.

The watchdog noted that the IRS has faced a surge in demand for its services as the federal government rolled out economic relief efforts that relied on the agency’s support.

The agency has successfully processed 136 million individual income tax returns and issued 96 million refunds totaling $270 billion during the 2021 filing season, the NTA said.

“The IRS and its employees deserve tremendous credit for what they have
accomplished under very difficult circumstances, but there is always room for improvement,” it added.

The NTA also stressed that the IRS is underfunded by Congress, which allocated enough funding for fiscal years 2020 and 2021 to reach “a 60 percent level of service,” the NTA said.

That hasn’t kept Michelle Singletary, a Washington Post columnist, from lashing out at the agency, saying last week that the IRS is “critically malfunctioning.”

“The agency is a hot mess. You are right to be mad as hell when you can’t reach somebody to help explain why your filing or refund hasn’t been processed,” she said. “And, yes, I cussed, because the time to be polite and forgiving for the failures at the IRS is so over.”

Singletary added that she is one of the millions trying to get in touch with the IRS to resolve an issue. She said her household was notified that they owe unpaid taxes from 2018, but some of the charges are erroneous.

In a statement, the IRS defended itself, saying that it’s done what it can with the staff it has.

“Our ability to answer phone calls reflects the amount of staffing available,” the IRS said. “Pending budget proposals would help the agency’s ability to assist more taxpayers, including on the phones.”

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