Finance

IRS says it’s making headway in clearing tax return backlog

AP Photo/Patrick Semansky
FILE – A sign is displayed outside the Internal Revenue Service building May 4, 2021, in Washington.A new government watchdog report finds that while most Americans are eligible to file their taxes for free, only a fraction use the services provided through the government. (AP Photo/Patrick Semansky, File)

The IRS says it is climbing out from under the unprecedented stack of tax returns that piled up after the agency had to scale back its operations and close facilities in 2020 following the onset of the pandemic.

The agency announced Tuesday that by the end of this week it will have cleared all original individual tax returns that were filed in 2021 and that didn’t contain any major mistakes.

“Due to issues related to the pandemic and staffing limitations, the IRS began 2022 with a larger than usual inventory of paper tax returns and correspondence filed during 2021,” the IRS said in a statement.

“The IRS took a number of steps to address this, and the agency is on track to complete processing of originally filed Form 1040 (individual tax returns without errors) received in 2021 this week,” the IRS added.

In getting through the 2021 backlog of around 8 million returns, the agency said it’s hit a new milestone in getting back to business as usual, according to a Treasury official.

There’s still a lot of catch-up work to be done. While the IRS has processed the “vast majority” of returns filed this year, it has about twice as many outstanding returns for 2022 as it does in a normal year. Millions of Americans are still waiting for their 2022 refunds.

But that doesn’t mean that last year’s backlog has simply become this year’s backlog. The agency is ahead of where it was at this point last year by about 1 million returns, the official said.

To get back on track, the IRS announced a major hiring initiative earlier this year, saying it was going to onboard a total of 10,000 new employees, with half of those being expedited hires. Of those 5,000 prospective employees, 3,000 have been given job offers and 1,500 have been successfully onboarded.

The IRS has also repurposed 2,000 existing employees of the agency to work specifically on clearing the backlog.

The pandemic dealt a huge blow to operations for the IRS. The agency has a workforce comparable in size to what it was in the 1970s, doesn’t have the ability to scan documents and still uses the COBOL programming language — originally developed in the 1950s in one of the earliest phases of computation.

The agency has long encouraged Congress to provide it additional funding to update its technology and expand its workforce.

Tags IRS irs funding irs modernization tax returns

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