Today, Deputy Secretary of the Treasury Wally Adeyemo and IRS Commissioner Charles P. Rettig traveled to the IRS Campus in Philadelphia where they thanked employees for their tireless efforts and outlined an aggressive plan that will end the pandemic backlog this year.
“Since the pandemic began, IRS employees have been called on to go above and beyond for the American people, and they have met the moment. But they’ve had to do so without adequate resources and funding, which is why the agency faces the challenges that it does today. The Biden Administration is committed to getting the IRS the stable, long-term funding it needs to be able to serve the American people,” said Deputy Secretary Adeyemo.
This year, millions of taxpayers are awaiting the processing of their tax returns and receipt of their refunds. The backlog—unprocessed returns and correspondence sent to the IRS but yet unanswered—has created one of the most challenging tax filing seasons in our nation’s history.
“IRS employees have been working tirelessly to process backlogged returns and taxpayer correspondence. To ensure inventory is back to a healthy level for next filing season, we are leaving no stone unturned—taking an all- hands-on-deck approach to ensure as many employees as possible are dedicating time to return processing,” said Commissioner Rettig. “This includes bringing on new employees and reassigning current IRS employees to process inventory.”
The IRS’s backlog challenges today stem from two key sources.
First, the agency has been chronically underfunded for more than a decade, with its budget cut by nearly 20% since 2010. Today’s historically low level of funding means that the IRS isn’t equipped to provide the American people the service they deserve. This is all a result of resource constraints: The IRS workforce is the same size it was in 1970, though the U.S. population has grown by 60 percent and the complexity of the economy has increased exponentially. In the first half of 2021, fewer than 15,000 workers handled nearly 200 million calls received, which translates to one person for every 13,000 calls.
Second, the pandemic created a unique set of new operational challenges for the IRS. The agency was called upon to support emergency relief for taxpayers, like distributing an unprecedented three rounds of Economic Impact Payments, totaling over $830 billion, to 85% of American households. Including individual refunds, the IRS has distributed over $1.5 trillion to Americans since the pandemic began. This was all done at a time when the IRS budget was at historic lows, and while adjusting operating protocols to ensure the IRS workforce was safe and healthy in the midst of the pandemic.
These circumstances have created significant challenges. Entering a normal filing season, the IRS typically has well under one million pieces of inventory. This year, the IRS entered the filing season with a backlog that is more than 15 times as large. This has a huge impact on people, and Commissioner Rettig has committed to addressing the backlog and returning to normal, healthy levels by the end of this year.
To meet this commitment, the IRS has laid out an ‘all-hands-on-deck’ approach:
Ultimately, these approaches are short-term salves for 2022’s tax season but don’t address the much deeper structural problem at the IRS. Had Congress funded the IRS adequately for the past decade, it would have entered the pandemic with the resources it needed – and would not have millions of tax returns waiting to be processed. The IRS and Treasury have worked closely with legislators to highlight these needs, and this year’s House-passed omnibus represents the largest funding increase for the agency in the last two decades. This is a meaningful step that will help the IRS hire thousands of new employees and secure contractor support that will expedite the processing of returns and correspondence.
But it is far from sufficient. The agency needs stable, long-term funding to be able to modernize outdated technological infrastructure and transition much of its manual work into automated processes that will be more efficient. IRS employees should not be hand-transcribing paper returns. Taxpayers should interact with the agency using state-of-the-art online tools. And every taxpayer who wants to call the IRS with a question should have their call and questions answered promptly. Providing the IRS the resources it needs to rebuild and modernize into the 21st century is critical to ensuring that the agency is able to serve the American people and the nation.
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