IRS Commissioner Charles Rettig on Wednesday estimated the agency would be able to clear its backlog of 2019 tax returns within 60 days.
During a Senate Appropriations subcommittee hearing, Rettig said that there are 335,000 tax returns that were filed last year that the agency still has to work through. That backlog has declined since the beginning of the year, when the agency had to get through about 7 million returns.
The IRS accumulated a backlog of mail last year after it directed its employees to evacuate their work sites for several months because of the coronavirus pandemic.
Rettig said the IRS has faced challenges because it received an influx in contacts from taxpayers but did not correspondingly receive an increase in funding.
"We've tried to do our best," he said.
National Taxpayer Advocate Erin Collins, who leads an independent office at the IRS that helps taxpayers resolve issues with the agency, said that she thinks the backlog of 2019 returns is likely to be cleared in less than 60 days. However, she noted that those taxpayers have faced lengthy delays in having their returns processed.
"If you're one of those 300,000, that's nothing to cheer about because most likely your return has been sitting there for over a year," she said.
In addition to the backlog of tax returns filed last year, Rettig said there is a separate issue involving tax returns that are "in suspension," where agency employees need to manually review the filings. There are about 6 million returns that fall into that category, he said.
Many of the returns in suspense are 2020 tax returns filed this year that utilized a provision in coronavirus relief legislation that allowed taxpayers to base their earned income tax credit amount off of their 2019 income rather than their 2020 income, Rettig said.
Others are returns where taxpayers claimed the recovery rebate credit to get stimulus-check money that they had not received prior to the start of this year's filing season. The IRS needs to manually review tax returns that claimed a credit amount that isn't in line with the IRS's information, Rettig said.