The Internal Revenue Service is in a state of “crisis” with 2022 tax filing season just a few weeks away, a government watchdog warned in an annual report to Congress this week.
National Taxpayer Advocate Erin M. Collins said the public could face “even longer delays” than it did last year as the IRS scrambles to address a backlog of tax returns.
“While my report focuses primarily on the problems of 2021, I am deeply concerned about the upcoming filing season,” Collins said in a press release. “Paper is the IRS’s kryptonite, and the agency is still buried in it.”
The IRS will begin accepting this year’s wave of individual tax filings on Jan. 24.
The agency still had a backlog of more than six million unprocessed individual tax returns and 2.8 million business returns as of mid-December, according to the National Taxpayer Advocate’s annual report. Collins noted some of the unprocessed returns “contain COVID-19-related relief that Congress provided taxpayers over a year ago.”
Several factors have contributed to the IRS backlog, including complications related to the COVID-19 pandemic, insufficient budgets and staffing and recent legislative changes, the report said.
Tax returns will be further complicated this year by the inclusion of monthly child tax credit payments and lingering stimulus payments from last year.
“Thus, the unprecedented processing and refund delays taxpayers experienced in 2021 could be as bad, and potentially worse, in 2022 if taxpayers do not file electronically or do not properly reconcile their monthly Advance Child Tax Credit payments or the third stimulus payment with their 2021 returns,” the report added.
The National Taxpayer Advocate is head of the Taxpayer Advocate Service, an independent entity within the IRS. The service’s website notes it is “here to ensure that every taxpayer is treated fairly and that you know and understand your rights.”
The watchdog’s dire forecast followed a similar warning from IRS Commissioner Chuck Rettig, who cautioned that taxpayers could be in for a frustrating experience this filing season.
“In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees and for me,” Rettig said in a statement. “IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us.”
The IRS has set a filing deadline of April 18 for most taxpayers. The agency is encouraging the public to file electronically and enable direct deposit to receive their returns in a timely manner.