IRS Processing Backlogs - What You Should Know
It is that time of the year again- tax time. Eagerly you gather all of the year's tax information with one goal in mind: the timely filing of your tax return. With all of your "i's" dotted and your "t's" crossed you submit your tax return and then you wait. And you wait. And then you wait some more. Something seems wrong, should it be taking this long for my tax return to get processed, you might be wondering. Did something go wrong? What do I do next?
Many Americans have found themselves in this situation over the past couple of years, so please know that you are not alone and you are not imagining things. The Internal Revenue Service has been struggling with unprecedented backlogs as a result of what one might describe as the "perfect storm". For years the IRS has been struggling with debilitating budget cuts and severe understaffing, all while changes in tax law and reporting requirements have added more duties to their checklist. Combine that with the COVID-19 Global Pandemic causing long government-mandated shutdowns and staffing problems, and you are left with an IRS backlog that leaves taxpayers in the lurch.
According to an article published in the Washington Post in mid-February of 2022, the IRS backlog has hit over 24 million returns, some of which have been in the queue for 10 months or more. Comments made by IRS personnel who choose to remain anonymous claim that the backlog will have an impact on the processing speed of tax returns in the 2022 tax filing season. They cite the primary causes of the backlog being the agency's inability to hire, train, and retain new staff.
While the backlog has captured the attention of those sitting on Capitol Hill, lawmakers have struggled with deciding exactly what actions to take in order to improve the conditions of the IRS and resolve the issue. On Tuesday, March 15th President Biden signed into law a massive fiscal year 2022 omnibus appropriations bill that included $12.6 billion dollars for the IRS' 2022 budget, a 6% increase from 2021. Additionally, IRS Commissioner Charles Rettig appeared Thursday, March 17th before the House Ways and Means Committee saying “As of today, barring any unforeseen circumstances, if the world stays as it is today, we will be what we call ‘healthy’ by the end of calendar year 2022, and enter the 2023 filing season with normal inventories.”
This promise comes following the IRS' plan to hire 10,000 additional workers. However, as previously noted, staffing has been among the agency's top issues causing the backlog. Whether or not this plan comes to fruition remains to be seen.
Even with promising news on the horizon for the 2023 tax filing season, if you are one of the millions of Americans currently caught up in the IRS' backlog you may be wondering how this will affect you and what steps you can take in the meantime. Here are some key points that you should know.
First you may be asking, if my previous year's tax return is held up as a result of the IRS backlog, should I wait until that is resolved before filing my 2021 tax return? The answer to that question is no. Your 2021 tax return will still need to be filed on time, regardless if you have a current tax return in the IRS backlog or not. Additionally, for the past two years since the beginning of the COVID-19 global pandemic, the IRS has extended the tax filing deadline beyond its typical date of April 15th. It is important to note that as of now, the IRS has no plans to extend the deadline of the 2022 tax filing season. This year’s deadline falls on April 18th, 2022.
Furthermore, if you do have a tax return you believe is held up in the IRS backlog and would like to call to inquire about the status of your return, you can contact an IRS customer service representative by calling 800-829-1040. Customer service representatives are available Monday through Friday, 7 a.m. to 7 p.m. local time. The best time to call is usually the first hour. Be prepared for long hold times, as the IRS reports higher than normal call volumes. Additionally, while you can inquire about the status of your return, it is unlikely that you will receive specific information, such as a date or estimated wait time, until your return is fully processed.
Backlogs are frustrating, especially when it comes to taxes. While there is not much we can do about the IRS backlogs, all signs point to improvement and to resolutions in the coming months. In the meantime, the best we can do is ensure you are in compliance with the tax laws and file tax returns in a timely fashion. If you have any questions or concerns about the IRS backlogs, or about your tax filings, please consult your tax advisor at Dermody, Burke & Brown.
The information reflected in this article was current at the time of publication. This information will not be modified or updated for any subsequent tax law changes, if any.