The Treasury Department and the IRS announced a program that aims to deal with the backlog of unprocessed tax returns and correspondence on March 10.[1]

The press release begins by noting the current situation:

This year, millions of taxpayers are awaiting the processing of their tax returns and receipt of their refunds. The backlog—unprocessed returns and correspondence sent to the IRS but yet unanswered—has created one of the most challenging tax filing seasons in our nation’s history.[2]

The release argues that two key factors have created this backlog.  The first relates to levels of IRS staffing and funding:

First, the agency has been chronically underfunded for more than a decade, with its budget cut by nearly 20% since 2010. Today’s historically low level of funding means that the IRS isn’t equipped to provide the American people the service they deserve. This is all a result of resource constraints: The IRS workforce is the same size it was in 1970, though the U.S. population has grown by 60 percent and the complexity of the economy has increased exponentially. In the first half of 2021, fewer than 15,000 workers handled nearly 200 million calls received, which translates to one person for every 13,000 calls.[3]

The release then moves on to the issues that arose during the COVID-19 pandemic that began in March of 2020:

Second, the pandemic created a unique set of new operational challenges for the IRS. The agency was called upon to support emergency relief for taxpayers, like distributing an unprecedented three rounds of Economic Impact Payments, totaling over $830 billion, to 85% of American households. Including individual refunds, the IRS has distributed over $1.5 trillion to Americans since the pandemic began. This was all done at a time when the IRS budget was at historic lows, and while adjusting operating protocols to ensure the IRS workforce was safe and healthy in the midst of the pandemic.

These circumstances have created significant challenges. Entering a normal filing season, the IRS typically has well under one million pieces of inventory. This year, the IRS entered the filing season with a backlog that is more than 15 times as large.[4]

Hiring Program

The release goes on to describe steps the IRS is taking to add personnel to deal with the backlog.

The IRS announced a program to hire 10,000 new employees:

The IRS today announced plans to hold job fairs across the country in March in Kansas City (March 18-19), Austin (March 24-25) and Ogden (March 31-April 1) with the aim of filling 5,000 open positions in the coming months. Working with Treasury, the Office of Personnel Management, and the National Treasury Employees Union, the IRS recently secured direct hiring authority for these employees, as well as an additional 5,000 new hires to be made over the course of the next year. Congress also helpfully provided hiring flexibilities in the House-passed omnibus to further expedite hiring in critical positions. This will allow for onboarding and training new emergency teams which will begin working on inventory within just a few weeks.[5]

A surge team of 700 employees will be reassigned to process new returns:

The IRS is in the process of shifting approximately 700 employees at the Austin, Ogden, and Kansas City campuses to process original returns. These efforts will address the historically high inventories of paper tax returns. At full capacity, this surge will close millions of cases each month.[6]

The release notes that the IRS had already moved 800 employees into a surge team to process amended returns and correspondence, a team that will continue in operation:

The second surge effort builds on efforts earlier in filing season, when the IRS moved hundreds of existing employees with previous experience to address the backlog. The IRS currently has approximately 800 people on this team, which started in February.[7]

The IRS has also begun mandating overtime for certain employees and will allow others to work overtime:

The IRS has required mandatory overtime for the over 6,000 employees processing original returns. Overtime is also available for approximately 10,000 employees processing amended returns and taxpayer correspondence. In all three submission processing centers, employees are working night shifts to work on return and correspondence processing.[8]

The IRS is also looking at using contractors to relieve the backlog:

The IRS is quickly pursuing additional contracting options to help with original return processing, including mailroom operations, transcription, and input of paper returns into IRS systems.[9]

Taxpayer Assistance in Preparing Accurate Returns

The IRS notes that errors found in returns submitted to the agency lead to a significant amount of correspondence:

A large share of the backlog stems from small errors by millions of taxpayers on their tax returns, which then require manual review by IRS employees before they can be processed. By helping taxpayers file accurately, the IRS can ensure that refunds are issued quickly (an error-free electronic return is processed within 21 days). Accurate individual filings also proactively reduce inventory by decreasing the share of returns that require time- intensive manual attention by employees.[10]

The IRS then highlights steps the agency has taken it asserts will help reduce the number of such errors:

The IRS has sent more than 100 million letters to taxpayers to prevent delays in processing. In the letters, the IRS proactively calculates the amounts received by individual taxpayers in both third Economic Impact Payments and the advance Child Tax Credit to ensure more accurate returns.[11]

The release provides information on online help that has been made available:

The IRS created and expanded self-service portals for taxpayers, including for online payment agreements, requesting payment transcripts, requesting Identity Protection PINs, and updating personal information. In just the last year, 9.4 million taxpayers have accessed their online accounts, allowing for important information—on benefits received, notices, and taxpayer payment history—to be easily and securely accessed.[12]

The agency next describes the in person help programs it has implemented:

The IRS has increased the availability of in-person support for taxpayers through extra hours (including weekends) at Taxpayer Assistance Centers throughout the filing season. It also awarded $41 million of support to over 330 organizations across the United States, including Tax Counseling for the Elderly and Volunteer Income Tax Assistance organizations which provide free federal tax return preparation for the underserved.[13]

Finally, the release discusses IRS phone assistance:

The IRS has expanded customer callbacks to 70% of its toll-free lines. Already this fiscal year, an callback option has been offered to more than three million taxpayers, saving those preparing their taxes almost one million hours of wait time. Additionally, the IRS has deployed 2,000 contractors to respond to taxpayer questions about Economic Impact Payments and the advance Child Tax Credit. Since the summer of 2021, these contractors have answered over 40 million calls.[14]

Technologies the IRS is Using to Reduce the Backlog

The release concludes with a description of the ways the IRS is attempting to use technology to reduce the backlog.

The IRS has begun automating certain error correction operations that previously had to be handled by an employee:

Last filing season, any error on a tax return required manual review by an IRS processing employee, meaning that just a few dozen such returns could be processed each hour. For this filing season, the IRS developed an automated tool that dramatically expands efficiencies and has helped the IRS close 1.5 million error resolution cases in a single week.[15]

The IRS also reminds readers of the program suspending the issuance of certain notices while the agency deals with the backlog:

To provide relief for taxpayers, the IRS reconfigured its systems to temporarily halt sending approximately 40 form notices to taxpayers, including mailing automated collection notices that are normally issued when a taxpayer owes additional tax, and the IRS has no record of a taxpayer filing a return. This action provides important relief for taxpayers who otherwise could have received a notice for taxes already paid, but not processed due to the backlog. Importantly, this also results in less inventory since taxpayers won’t contact the IRS to inquire about the notices received.[16]

Finally, the IRS notes the use of automated support options:

he IRS developed new automated support technology to help taxpayers, including online live assistance and new voice and chat bots (in English and Spanish) to quickly answer taxpayer queries. Taxpayers’ use of automated services more than doubled in the last year. The improvement of automated phone assistance and other tools has allowed the IRS to move many phone service representatives to work inventory given the exigencies of this filing season.[17]

[1] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022, https://home.treasury.gov/news/press-releases/jy0648 (retrieved March 13, 2022)

[2] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[3] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[4] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[5] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[6] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[7] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[8] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[9] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[10] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[11] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[12] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[13] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[14] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[15] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[16] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022

[17] “Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog This Year,” US Treasury Press Release, March 10, 2022