IRS Backlog and Delays
The IRS continues to struggle with impacts from the pandemic and staffing shortages. With several processing centers shut down in 2020 during the height of the COVID-19 pandemic, a large backlog of paper-filed and amended returns were left unprocessed and pushed into the following year. The IRS did not hire as many staff as planned so the backlog has compounded with the 2021 and 2022 tax seasons.
The backlog and staffing shortage has also affected taxpayer account management, making it more time-consuming to resolve tax issues. When a taxpayer receives a notice from the IRS, they generally need to respond by phone or mail. During the 2022 filing season, the IRS only answered about 10% of calls received. Correspondence sent by mail or fax to resolve tax issues are taking an average of 8 months to process – nearly three times as long as pre-pandemic processing times.
Additionally, there has been an uptick in erroneous notices sent out by the Service. These notices commonly request payment of tax that has already been paid. The notices are often automatically mailed before the taxpayer’s account is updated to reflect the payment. As a reminder, the IRS will never contact you via phone or email. If you receive a letter or notice from the IRS, you should discuss it with your tax advisor before taking action. The IRS plans to combat these issues with increased hiring and better staff training. There is also a focus on increasing the number of calls answered and developing more ways to resolve tax issues online.
Lastly, in recognition of high gasoline prices this summer, the IRS implemented an increase in the mileage rates to compute deductible automobile expenses. Taxpayers who claim this deduction should keep accurate records of their mileage and dates of travel. One can be sure these dates will be scrutinized staff shortages notwithstanding!
