Congress sends bipartisan letter urging IRS to address backlog

A group of 93 members of Congress signed a bipartisan, bicameral letter to IRS Commissioner Charles Rettig to urge the IRS to avoid delays and staff shortages ahead of the 2023 tax-filing period, and is receiving support from the American Institute of CPAs. 

"We believe that the IRS must take additional steps to improve customer service issues, decrease processing delays, and work-down the backlog of paper returns and correspondence by continuing the maximum use of overtime and surge teams, as well as the continued suspension of automated notices and collections," said the letter, led by Sen. Bob Menendez, D-New Jersey, and Bill Cassidy, R-Louisiana, along with Rep. Abigail Spanberger, D-Virginia, and Brian Fitzpatrick, R-Pennsylvania. 

Monday's letter cited a National Taxpayer Advocate report stating that the IRS had a backlog of 21.3 million unprocessed paper tax returns, which represents a 1.3 million increase compared to May 2021. Furthermore, the agency was only able to meet 12% of its hiring goals for customer service representatives. 

Samuel Corum/Bloomberg

In June, National Taxpayer Advocate Erin Collins released a midyear report to Congress, where she discussed her concerns about delays in the processing of paper-filed tax returns, and how they affected taxpayer refunds. Before the pandemic, it generally took the IRS around four to six weeks to deliver refunds to paper filers, but over the past year, refund delays could easily exceed six months. The report said the IRS would have to process over 500,000 Forms 1040 per week to erase the 2022 backlog, which is twice the current pace. 

"The IRS's paper processing delays were evident more than a year ago, and the IRS could have addressed them more aggressively at that time," said Collins in her report. "Had the IRS taken steps a year ago to reassign current employees to processing functions, it could have reduced the inventory backlog carried into this filing season and accelerated the payment of refunds to millions of taxpayers."

It's not the first time that Congress received written recommendations to improve the backlog and enhance the customer experience. 

In March, lawmakers put pressure on the IRS to provide further relief to taxpayers who have been receiving warning notices, and the AICPA expressed skepticism about the IRS's policies on delays and staff shortage. On July 11, the AICPA submitted a letter to ask the Treasury Department and the IRS to protect professionals and taxpayers from processing delays and penalties for the 2023 tax season by providing better inventory levels management. 

"It's important for the IRS to take immediate steps to prevent another stressful and confusing tax season for taxpayers, practitioners and the IRS," said Edward Karl, AICPA vice president of tax policy and advocacy. "Until the backlog is truly at a healthy level and the IRS' service deficiencies are corrected, taxpayers and practitioners will continue to be unfairly and unnecessarily burdened."