Despite assurances from Internal Revenue Service (IRS) Commissioner Charles Rettig that the agency’s backlog would be cleared by the end of the year, a top IRS watchdog warns the agency could fall short.
“I would like to be optimistic, but I don’t see that all of that will be cleared before the end of December,” National Taxpayer Advocate Erin Collins said last week.
In a letter to Commissioner Rettig, Ways and Means Republican Leader Rep. Kevin Brady (R-TX) along with Republican member Rep. Darin LaHood (R-IL) are calling for an update on how the agency plans to clear the backlog of paper returns by the end of this year, and the steps being taken to improve customer service and prevent future backlogs.
The members write:
“We write to request that you provide the Committee on Ways and Means with an update detailing the Internal Revenue Service’s (IRS) plan to clear the backlog of paper returns by the end of 2022 and the steps being taken to improve customer service and backlog management in the future. For more than a year, we have been seeking information about the backlog of unprocessed returns and sharing our concerns about the negative impact a persistent backlog will have on taxpayers.
“Despite a March 2022 plan to move resources to clear the backlog by the end of the year, as of October 24th the IRS still has over 7.9 million unprocessed tax returns and a total of over 17.2 million returns pending. We continue to conduct oversight on this matter and request a status update on Commissioner Rettig’s commitment to clear the backlog by the end of 2022. We are also requesting a written plan for the IRS to maintain healthy inventories and avoid large backlogs going forward.”
Democrats failed to address the agency’s backlog, which has become a crisis for American taxpayers.
- Due to the Administration and Democrats’ inaction on the agency’s historic backlog, Americans are waiting longer for their tax filings to get processed.
- These returns represent millions of Americans waiting on money that they may rely on for essentials like groceries and childcare.
- Within his first year in office, President Biden has overseen $6 trillion in total spending with more than $1 billion earmarked specifically by the Democrats for COVID response by the IRS, but it took months of Republican pressure to take action on the tax return backlog.
Democrats instead supercharged the IRS to go after middle-income earners.
- A previous Congressional Budget Office analysis makes clear that under Democrats’ plan, audit rates will “rise for all taxpayers” and the policy “would return audit rates to the levels of about 10 years ago.”
- The Joint Committee on Taxation, Congress’s official tax scorekeeper, says that from 78 percent to 90 percent of the money raised from under-reported income would likely come from those making less than $200,000 a year. Nearly half of the audits would hit Americans making $75,000 per year or less and only four percent to nine percent would come from those making more than $500,000.
- Democrats voted against guardrails preventing audits for middle-income earners, instead using non-binding legislative language that would do nothing to protect taxpayers from agency abuse.
Republicans are fighting to hold the IRS accountable.
- At the GOP’s urging, the IRS announced it will use money in its existing budget to hire 10,000 workers to address the backlog crisis.
- Republicans want to prevent the IRS from using its massive $80 billion infusion of taxpayer dollars to squeeze more revenue out of American taxpayers who earn less than $400,000 per year.
- Republicans would rescind the Biden Administration’s funding for new IRS agents while preserving funding for customer service and IT modernization.
Full letter text:
Dear Deputy Secretary Adeyemo and Commissioner Rettig,
We write to request that you provide the Committee on Ways and Means with an update detailing the Internal Revenue Service’s (IRS) plan to clear the backlog of paper returns by the end of 2022 and the steps being taken to improve customer service and backlog management in the future. For more than a year, we have been seeking information about the backlog of unprocessed returns and sharing our concerns about the negative impact a persistent backlog will have on taxpayers. Despite a March 2022 plan to move resources to clear the backlog by the end of the year, as of October 24th the IRS still has over 7.9 million unprocessed tax returns and a total of over 17.2 million returns pending. We continue to conduct oversight on this matter and request a status update on Commissioner Rettig’s commitment to clear the backlog by the end of 2022. We are also requesting a written plan for the IRS to maintain healthy inventories and avoid large backlogs going forward.
A letter sent to IRS Commissioner Rettig on December 9, 2021, that was signed by nearly one hundred Members of Congress, requested information regarding the agency’s plans to resolve its tax return processing backlog, prepare for the start of the next tax filing season, and alleviate the taxpayer’s burden from the backlog. This request was fueled by an October 14, 2021, memorandum from the Treasury Inspector General for Tax Administration (TIGTA) to Secretary Yellen which claimed, “[t]he backlog of individual returns and other types of taxpayer account work nearly doubled when compared to the 2020 Filing Season.” The December 2021 letter points to the compounding backlog as a severe concern being communicated to Members by taxpayers who reported negative experiences with processing delays and inadequate taxpayer assistance.
Ways and Means Committee Ranking Member Kevin Brady, Ways and Means Oversight Subcommittee Ranking Member Tom Rice, Appropriations Committee Ranking Member Kay Granger, and Financial Services and General Government Subcommittee Ranking Member Steve Womack again raised the alarm on January 19, 2022, emphasizing the seriousness of the backlog and requesting the IRS take an all-hands-on-deck approach to the crisis. The letter also questioned why increased unobligated funds allocated to the IRS had not been used to reduce the backlog and called for a report on significant actions that will be taken to mitigate the crisis. The IRS responded on January 24, 2022, blaming the pandemic and legislative changes while stating that the IRS would share the efforts being taken to “reduce inventory to healthy levels” in a verbal briefing. The inadequate response did not provide answers to the questions posed and shows an unacceptable disregard for the ongoing problem.
Representatives Brady, Rice, Granger, and Womack followed up with another letter dated February 2, 2022. This letter acknowledged the IRS’ challenges but also expressed disappointment with the January 24, 2022, response and reiterated the request for a written response to questions regarding the compounding backlog, poor customer service, and use of the increased unobligated funds. On March 10, 2022, the Administration chose to publicly announce a Pandemic Inventory Backlog plan in a press release, while Congressional inquiries for such information were left unattended.
On March 17, 2022, IRS Commissioner Rettig told Ways and Means Committee Members that the IRS was committed to clearing the backlog of unprocessed work by the end of 2022.8 A TIGTA report dated September 16, 2022, found that “[t]he IRS continues to have significant inventory backlogs at its Tax Processing Centers.”9 TIGTA also noted that the delays in processing are causing significant burdens on taxpayers. Meanwhile, the most recent data available to Congress shows that the IRS still has over 17.2 million tax returns awaiting action, which are either unprocessed or in suspension. Commissioner Rettig’s commitment to clearing the backlog by the end of the calendar year looks unlikely to succeed. Please provide the information requested below:
- A status update on IRS Commissioner Rettig’s commitment to clear the backlog by the end of 2022, including the agency’s latest data on unprocessed and suspended 2022 returns.
- An evaluation of the March 10, 2022, Pandemic Inventory Backlog plan, including a specific evaluation of how successful each piece of the plan has been over time. Please include specific metrics when possible.
- A written plan to maintain healthy inventories and avoid large compounding backlogs going forward.
From the first signs of a major IRS backlog problem, Ways and Means Republicans have sounded the alarm and urged the IRS to take significant action to get ahead of the problem. While the agency was slow to mobilize at first, we were generally pleased when you announced the March 10, 2022, backlog plan. Unfortunately, we are concerned that the action was too little too late. It is important for us to understand what worked and what did not. With that in mind, please respond to these requests by November 17, 2022.