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'Still Waiting': Lawmakers pressure IRS amid major backlogs

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Casey Harper | The Center Square

(The Center Square) – Both Republicans and Democrats are hammering the Internal Revenue Service for its millions of backlogged returns.

The IRS’ issues can be traced in part back to President Joe Biden’s monthly child tax credit, part of a $1.9 trillion “COVID relief” bill. The program tasked the IRS with handing out federal funds last year to millions of Americans based on the age and number of children they had.

The National Taxpayer Advocate (NTA) released its federally commissioned report in mid-December, which found that the IRS still had 2.8 million unprocessed business returns, 6.2 million unprocessed individual returns, 2.4 million unprocessed amended individual returns, along with 427,000 amended business returns. The report also found the IRS has roughly 4.75 million pieces of unprocessed correspondence from taxpayers.

Now, the IRS is warning of more issues this year. The IRS issued an “urgent reminder” in January, warning Americans to file electronically “to help speed refunds” heading into the next tax season.

IRS Commissioner Charles Rettig published an op-ed in Yahoo News last week sharing that message.

"As the IRS begins this tax season, it continues to face enormous challenges. Our dedicated workforce has done everything it can to prepare for filing day on April 18,” he wrote. "Today, millions of people are still waiting for prior years’ returns to be processed, and refund checks to arrive in the mail, while preparing for their upcoming tax filing. While we can’t immediately solve these significant issues, our employees are doing everything they can, and I am committed to returning to normal inventory levels before next year.”

Republicans on the House Oversight Committee sent a letter to the IRS demanding they fix the bureaucratic issues. Those Republicans point to outdated software and “COVID-19 related telework policies” allowing most IRS employees to work remotely.

“For many Americans, their tax refund can equal six weeks of take-home income,” the letter said. “The volume of tax returns and refunds completed each year shows the far-reaching impact that processing delays could have for the average American. Processed returns are also essential for those who may be entitled to apply for other government benefits such as loans administered by the U.S. Small Business Administration. It is therefore imperative that the IRS take steps to mitigate any processing delays, which can delay refunds and access to economic relief programs.”

But Republicans are not the only ones hitting this issue. U.S. Sen. Bob Menendez, D-N.J., a member of the Senate Finance Committee, which oversees the IRS, partnered with U.S. Rep. Abigail Spanberger, D-Va., in a letter to the IRS that was signed by 45 members of Congress. They urged the IRS to increase overtime and add staff to address the problem.

“We continue to hear from constituents who are still waiting for their 2020 tax returns, have received confusing notices about overdue payments they already paid, and cannot reach anyone at the IRS for assistance. Many of these problems stem from the millions of unprocessed correspondence items from 2021,” the letter said, adding that "taxpayers require more immediate relief, especially with the 2022 filing season already underway.”

Lawmakers have also called for the IRS and the U.S. Department of Treasury to provide “penalty relief” for Americans, many of whom are receiving notices for not paying their taxes. The problem is, they did pay their taxes, but the IRS has not yet processed their filings. 

A bipartisan group of 214 lawmakers sent a letter to the IRS and Treasury Department in January, highlighting the negative impact on small businesses.

“In many cases, the delayed processing of amended returns has been devastating to small businesses in our communities whose applications for emergency loans from the Small Business Administration have been caught in limbo nearly two years after the COVID-19 pandemic began,” the letter said. “The situation has deteriorated to a point that the Taxpayer Advocate Service (TAS) will no longer accept cases solely involving the processing of amended returns. This has made it impossible for frustrated taxpayers to find any help.”