Long waits, delayed refunds and confusion made taxpayer interactions with the Internal Revenue Service, never the most joyous of exchanges, more frustrating than ever. And that could just be a warmup for what’s to come this year, says a new watchdog report.
Americans visited the IRS website, hoping to learn the status of their refunds, more than 630 million times last year. That left many in limbo as the tax agency fell behind in processing returns and responding to inquiries, according to the National Taxpayer Advocate, an independent organization within the IRS that came up with the findings.
“There is no way to sugarcoat the year 2021 in tax administration: From the perspective of tens of millions of taxpayers, it was horrendous,” reads the report, later adding, “2021 was the most challenging year ever for taxpayers.”
While the problems, which ranged from poor telephone service to premature collection notices due to delays in processing taxpayer responses, were aggravated by the pandemic, their origin is in budget issues. From 2010 to 2019, Congress reduced the IRS budget from $14.6 billion to $11.5 billion, and its staff dropped from 94,000 employees to 73,000, according to Congressional Budget Office estimates.
The Biden administration attempted to increase the IRS’s budget as part of the Build Back Better program, but with that initiative stalled, the agency is seemingly facing another year of struggles, which will make it even more frustrating for taxpayers this year.
The IRS started the 2021 season behind and never caught up. That situation is set to repeat in 2022, with an even bigger backlog of old returns. Paper returns took an average of 8 months to process. (This year’s tax season begins on Jan. 24. On Dec. 23, the IRS said it still had 6 million unprocessed individual returns from 2021. (Returns filed electronically are processed faster.)
“As the IRS is preparing to begin the 2022 filing season, it is poised to carry over millions of unprocessed returns and millions of pieces of taxpayer correspondence, resulting in even longer delays for taxpayers who have been patiently waiting for far too long,” the report read.
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