Why TIGTA Did This Audit

Backlogs of tax returns and other types of tax account work resulting from the Coronavirus Disease 2019 Pandemic (Pandemic) have had a significant impact on the IRS and taxpayers. The backlogs continued into Calendar Year (CY) 2023 with approximately 4.5 million returns awaiting processing or other resolution as of the week ending December 23, 2022.

The IRS significantly reduced the inventories of tax returns and other types of tax account work during CY 2023, and many functions in the Tax Processing Centers have returned to pre-Pandemic levels. However, areas of concern remain.

This audit is part of a series of reviews to evaluate the IRS’s efforts to reduce the significant backlogs at its Tax Processing Centers.

Impact on Tax Administration

Delays in processing backlogged tax returns and other types of tax account work burden taxpayers, including delays in receiving their refunds. Further, significant inventories of tax account work continue to delay the resolution of taxpayer account issues including the review of amended tax returns and other Accounts Management work.

In December 2020, the IRS had around 16.5 million tax returns either being prepared for processing or on hold during processing because of the effects of the pandemic.

Fast forward to December 2022, and that number dropped to 4.5 million.

Before the weekend hits, here are 5 numbers from our new report that show how the IRS reduced its backlog – and what challenges remain.

2 million

The number of unpostable cases in IRS’s total inventory. These are transactions that will not post to a taxpayer’s tax account because they failed an IRS validity check, and they are the biggest part of the 4.5 million backlogs.

1.4 million

The number of paper tax returns being prepared for processing.

9

The number of outdated mail sorting machines the IRS plans to replace. These new machines could help the IRS quickly open and prepare mail for processing, speeding up their ability to process paper returns and deliver refunds.

So…

IRS made some great strides reducing tax return backlogs.

But…

they still need to make headway resolving taxpayer issues.

2.8 million

The number of cases that the IRS has not been able to resolve within its established timeframes.

5,159

The number of customer service reps the IRS onboarded (as of October 2023) to help work these cases – 97% of their hiring goal.

   Read the full report    .

If you need more information, please do not hesiotate to contact us US Tax Consultants