IRS falls behind on millions of returns
Millions of 2021 taxpayer returns filed with the Internal Revenue Service have yet to be completed, and the agency is facing a larger-than-normal backlog at this point in the tax season, the Treasury Department said Tuesday.
More than twice as many tax returns await processing “compared to historical norms at this point in the calendar year,” according to a letter sent to lawmakers by top Treasury and IRS officials.
Most of the backlog relates to paper returns, which take longer to process than those filed electronically. The IRS began this tax season with 8 million unprocessed tax returns from the previous year. Because the IRS deals with returns in the order they are received, the agency spent much of this year trying to catch up on older taxes before turning to current ones.
Treasury and IRS officials have blamed the initial backlog on severe resource challenges after Republican lawmakers gutted the agency’s budget in recent years.
In a letter to lawmakers, Wally Adeyemo, the Treasury Department’s deputy secretary, and Charles P. Rettig, the IRS commissioner, said the agency expected to finish processing all individual tax returns without errors that were received last year by the end of the week, with business returns filed in 2021 completed “shortly thereafter.”
“Despite this progress, there are real challenges ahead,” Adeyemo and Rettig wrote. They noted that “because the IRS entered this filing season with a significant backlog, millions of paper returns received in 2022 have not yet been processed.”
The backlog has prompted stiff criticism from Republicans and Democrats, who have demanded answers about why millions of taxpayers have waited months to get their tax returns and federal refunds.
The Biden administration has pointed to the agency’s budget as a reason for its woes, saying it needs more money to hire qualified staff and improve its technology.
President Joe Biden has called for investing $80 billion in the agency over a decade to help crack down on tax cheats, estimating that would raise $400 billion in tax revenue.