IRS Backlog

After two extended tax filing seasons, the COVID-19 pandemic continues to wreak havoc on the IRS. On Monday, officials from the Treasury Department stated that the IRS will face “enormous challenges” during the upcoming tax filing season. Of note, the IRS backlog of unprocessed individual returns from last tax season and a reduced staff will cause delays with refunds and other taxpayer services.

IRS Backlog

In her Annual Report to Congress, released today, Erin M. Collins, the National Taxpayer Advocate, reported as of late December, the IRS backlog consisted of: 

• 6 million unprocessed original individual returns (Forms 1040),
• 2.3 million unprocessed amended individual returns (Forms 1040-X),
• more than 2 million unprocessed employer’s quarterly tax returns (Form 941 and Form 941-X), and
• about 5 million pieces of taxpayer correspondence.

Collins stated that some of the taxpayer correspondence “dated back at least to April and many taxpayers still waiting for their refunds nine months later.”

Reduced IRS Staff

The IRS has fewer than 15,000 customer service representatives (CSR) tasked with answering telephone calls. During a normal tax season, the agency receives two to three million calls each day. In 2021, the agency experienced a 600% increase in calls.  As the IRS embarks on its busiest time of year with increased calls, a reduced staff and multi-million backlog of unprocessed returns, delays should be expected.

WM WISDOM:

If you have a question regarding your return, use online services available at IRS.gov. The reduction in IRS employees due to budget cuts and employee illness has created a long wait time to reach an in-person representative.

Expecting a Refund?

If you are expecting a refund when you file your 2021 taxes, as soon as you have all of your information in order to file an accurate return, the IRS “urges taxpayers to file electronically with direct deposit information.” Taxpayers may begin filing their 2021 tax returns on January 24th.

As reported in our January 5th WM Wednesday Wisdom, if you receive a letter from the IRS regarding your Child Tax Credit (CTC) or Economic Impact Payment (EIP), be certain to retain those letters to include with your tax documents. If you do not have all of your documentation, your return may be delayed.

If you are still waiting for your 2020 return to be processed or a refund, you may still file your 2021 return.

WM WISDOM:

Compile and retain all necessary paperwork prior to filing your 2021 taxes to avoid unnecessary delays or adding to the existing IRS backlog.

Should you have questions about this topic or any other topics related to your personal or business situation, please contact us.

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