The Internal Revenue Service’s ambitious plans to hire 10,000 more employees over the next year are going to be difficult to attain as a new report reveals that the IRS met only 67% of its hiring goals for last year in a key area.
The report, released Monday by the Treasury Inspector General for Tax Administration, reviewed the results of the 2021 filing season. It found that inventory backlogs of unprocessed tax returns from the 2020 filing season continued to affect the IRS’s ability to provide timely service to taxpayers during the 2021 filing season.
“These backlogs will likely continue into the 2022 filing season unless the IRS takes unprecedented steps to address them,” said the report.
Last week, the IRS announced plans to tackle its backlog of approximately 20 million unprocessed tax returns by hiring 5,000 employees in the coming months and 5,000 more over the next year. To do that, the IRS will be holding job fairs across the country, including upcoming ones for its processing centers in Kansas City, Missouri; Austin, Texas; and Ogden, Utah. It has also been reassigning employees from other functions and adding surge teams.
Last week, Congress also approved a 6% funding increase for the IRS, much of which will go toward taxpayer service, although the funding increase is only about half of what the House had approved last summer.
The TIGTA report found that the closure of a tax-processing center in Fresno, California, last year further increased backlogs at the tax-processing centers in Kansas City, Missouri, and Ogden, Utah. But the IRS continues to face challenges in hiring sufficient staff. For example, as of May 18, 2021, the IRS had a hiring shortfall of 814 individuals it estimated were needed to meet demand in the Kansas City and Ogden tax processing centers, according to the report, and the IRS achieved just under 67% of the hiring goal for submission processing of tax returns.
Last month, the IRS reversed plans to close its processing center in Austin, Texas, to cope with the growing backlog.
The TIGTA report also contained a number of other findings of the last tax season, including the IRS’s processing of refundable tax credits for tax relief during the pandemic. It noted that the IRS implemented processes to allow taxpayers to elect to use prior-year earned income when claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) and found that the IRS correctly allowed credits for 2.2 million EITC claims totaling more than $7.6 billion. However, TIGTA identified 13,130 taxpayers who received more than $20.5 million less in EITCs and 900 taxpayers who received $485,415 more in EITCs than they were entitled to receive. TIGTA also identified 8,335 taxpayers who received $8.3 million less in ACTCs and 1,257 taxpayers who received $1.5 million more in ACTCs than they were entitled to receive.
The report also looked at how the IRS handled stimulus payments last year. As of Oct. 14, 2021, the IRS has issued more than 13.5 million recovery payments totaling $6.3 billion for taxpayers who claimed unemployment compensation. TIGTA’s review of 8.3 million of the 13.5 million recovery payments found the payments were accurate.
The IRS also continued to face challenges answering the phones. As of May 28, 2021, taxpayers made 185 million total attempts to contact the IRS by calling the various customer service toll-free telephone assistance lines. The IRS answered 25.6 million calls with automation, while IRS employees answered more than 11.4 million calls, providing a 15.5% level of service with a 19-minute average speed of answering the calls. Last week, the IRS and the Treasury said they were adding 2,000 contractors to respond to taxpayer calls about Economic Impact Payments and Child Tax Credits and expanded customer callback services to 70% of the IRS’s toll-free lines. The IRS is also going to add automated chatbots to help taxpayers answer their questions online and by phone.
In the report, TIGTA made 10 recommendations to the IRS to take actions to correct returns TIGTA identified as potentially erroneous, to ensure that applicable computer programming changes are requested and implemented, and to evaluate the need for the current Identity Protection Personal Identification Number process in submission processing. The IRS agreed with all 10 of TIGTA recommendations.
“The backlog of unprocessed prior-year Form 1040 family returns affected the filing of electronic returns for the 2021 filing season and will also affect filing season 2022,” wrote Kenneth Corbin, commissioner of the IRS Wage and Investment Division and chief taxpayer experience officer in response to the report, who also addressed another glitch revealed in the report. “For security purposes, a taxpayer filing a self-prepared return without a personal identification number (PIN) is required to enter their prior-year adjusted gross income for a return to be accepted. Electronic Filing Services has worked with external industry partners and internal communication specialists to alert taxpayers of procedures to take when this occurs. Taxpayers can file electronically if they follow the published guidance located on IRS.gov.”