While the pandemic has left the IRS in shambles with furloughs and staffing issues, COVID is not entirely to blame for the current historic backlog. Other major factors include budget constraints and outdated technology in addition to being understaffed.
This past week, the IRS announced that they hope to relieve this backlog by the end of 2022 by hiring for more than 5,000 positions across several locations now and plan to hire for another 5,000 positions over the next year. They are also increasing their information technology department with over 200 experts to help modernize their systems. To help improve matters in the middle of this current tax season, they have suspended several automated notices and are also trying to shuffle workers in order to prioritize tax return processing.
Chris Cialese, CPA, MSTFP appears live on a Yahoo! Finance segment to discuss the IRS backlog.
As of March 11, 2022, nearly 7 million individual returns remain unprocessed. Of the 7 million returns, 4.5M are 2021 and prior year returns with errors that require special handing to be fully processed. The special handling process on average is taking more than 21 days to resolve. In some cases, it could even take 90 to 120 days.
The current timeframe to have an amended return processed is 20 weeks instead of the typical 16 weeks. In some firsthand cases, it could take even longer.
Some taxpayers may even see multiple notices asking for the taxpayer to resend their amended return because the original may have been received by the IRS, but could no longer be located.
IRS computers perform a quick check on items and if everything agrees, the return gets processed faster. Not having all 1099s or W2s reported on your return can cause a delay. If something has a different number (Corrected W2 vs Original W2), there may also be a delay. Specific credits may get an extra look simply because of increased fraud, such as claims for the Child Tax Credit, Earned Income Tax Credit (IRS says between 21-26% of EITC is paid in error), Recovery Rebate Credit (Stimulus Payments). In some instances, they will make erroneous tax refunds to process returns quicker, but then will send a notice later on to correct an issue they saw.
If you receive a notice related to your 2021 return or have been working on resolving a notice for a prior filing, the IRS is still slow to respond. In some cases, incorrect notices were issued because the IRS hasn’t cleared their backlog yet. The IRS Commissioner did pause automated notices to try to prevent this from happening while they catch up on mail.
If you need assistance this tax season and are overwhelmed with trying to resolve issues with the IRS, turn to an Alloy Silverstein CPA for guidance.
Manager & Director of Cloud Services
Chris provides accounting, tax planning, and consulting services to professional athletes, family entertainment centers, and other businesses in the amusement and hospitality industry. He also aids clients in implementing cloud accounting solutions.
View Chris's Bio → Follow @AthleteCPA on Twitter →
