The IRS is still broken. People are still upset. As of the last day of the extended 2021 tax season, the IRS had a backlog of over 35 million tax returns requiring manual processing. This backlog includes:
* 16.8 million paper tax returns waiting to be processed,
* 15.8 million returns requiring further review that have been set aside for further processing, and
* 2.7 million amended returns filed since the IRS had to restrict employee access to IRS facilities due to COVID.
10.3 million of the returns set aside for further processing were in the Error Resolution System when the 2021 tax filing season ended in May. These returns were identified as having a potential error. Large numbers of returns suffered from a discrepancy between the amount of the Recovery Rebate Credit claimed by the taxpayer and the amount the IRS’s records indicated they were qualified to receive. For most of these returns, IRS workers had to review the returns and decide whether to process the refund or confirm the error.
1.4 million returns were in the Processing Rejects unit. Many of these required reconciliation of the Premium Tax Credit with the Advance Premium Tax Credit or had math errors.
2 million returns were in the “unpostables” unit. Most of these returns had problems with taxpayer’s name, identifying number, or both.
Of the 85 million calls made to the IRS toll-free telephone number, three percent reached a customer service representative. This is better than the 2% reported in my blog post of April 22.
It should be noted that when the 2021 tax filing season started in February, the IRS had still not processed 11.7 million paper-filed returns. COVID was the main reason for the backlog of returns filed in 2020.
For further information, please see the National Taxpayer Advocate’s Objectives Report to Congress for fiscal year 2022, issued on June 30, 2021.
Mark S Gleason CPA