IRS Sends 1,200 Employees To Tackle Tax Refund Backlog

(Bloomberg) -- The Internal Revenue Service is temporarily re-assigning about 1,200 employees to help the agency navigate what will likely be one of the most challenging tax filing seasons in years, according to a person familiar with the plans.

The employees will serve as additional customer customer service representatives and tax examiners to help the agency address a large backlog of unresolved tax returns from previous years. Those workers will be moved in the coming weeks and stay on through the fall, according to the person, who was granted anonymity to discuss the preparations.

The influx of attention on the backlog comes as the IRS began this filing season with a close to 10 million unprocessed returns from previous years, compared to fewer than 1 million in normal years. Taxpayers have complained that they are still waiting for resolutions of disputes over refunds from the 2020 tax season, the result of IRS office closures during the pandemic and additional benefits distributed through the tax system, including stimulus payments. Resolving prior year disputes will help taxpayers file accurate returns this tax season.

The IRS has had its budget cut several times in the past 10 years, and has some of the lowest staffing levels in decades. During the 2021 tax season, there were fewer than 15,000 people to handle more than 240 million calls taxpayers made to the agency, or roughly one person to handle every 16,000 calls received, according to the IRS.

The employee re-shuffle could help mitigate what the IRS has warned could be a frustrating period for taxpayers. Agency officials said Americans could experience delays in receiving their refunds this year, particularly if there are errors on their forms. The agency is encouraging people to carefully check their tax returns before submitting them, in addition to filing electronically and requesting a direct deposit for the best chance of receiving refunds within the typical 21-day waiting period.

This tax season is likely to be one of the most complicated in recent years. Taxpayers will use their forms to reconcile any missing coronavirus stimulus payments or child tax credit amounts. Additionally, a wave of new businesses created in 2021 means that that more owners will be filing lengthier forms.

IRS Commissioner Chuck Rettig has said that Congress should allocate more money for the agency in order for it to hire the staff and invest in the systems it needs to make the tax system more efficient. Democratic lawmakers are pushing for $80 billion in additional funding for the agency over a decade, an amount Republicans have said is too much.

“You want the IRS to be successful,” Rettig, who was appointed by President Donald Trump, said last month. “You want roads, you want education, you want peace and freedom.”

Senator Elizabeth Warren, a Massachusetts Democrat, has urged her fellow lawmakers to give the IRS additional money to help taxpayers and combat tax evasion. It's unclear whether the agency will get any additional funds this year with Congress deadlocked on government spending bills and President Joe Biden's economic agenda, both which call for more funds for the tax agency.