The IRS Has a Massive Backlog. What It Means for Taxpayers.
Tax season isn’t exactly a joy in most years, but 2022 could be a particularly rough one — for taxpayers and the IRS alike.
In short: The Internal Revenue Service has entered this year woefully underfunded and undermanned. And worse, the IRS is sitting on a backlog of millions of unprocessed returns just as the 2022 tax season is getting under way.
The problem, of course, is that the IRS’s problems are our problems. So the fact that the agency is so overburdened at the moment means individual taxpayers could face some issues with their 2022 returns.
Read on as we outline what has led to the IRS backlog, how taxpayers will be affected and what people are being advised to do about it.
How We Got Here
The IRS’s issues have been building over the past two years.
Like most governmental agencies (and businesses, for that matter), the IRS was hobbled by the COVID-19 pandemic that hit during the first half of 2020. The agency shut down all in-person enforcement activities and closed IRS mail processing centers between March and July. While the IRS did adopt teleworking, it took time as the agency adopted a number of new technologies and policies to get its workers plugged in and back up to speed.
Even then, the IRS eventually had to pause new enforcement to process returns it had on hand.
However, the agency’s burdens were compounded with more work. Remember: The IRS had to administer all three Economic Impact Payments, and later in 2021, it also had to send out monthly Child Tax Credit payments.
Help appeared to be on the way in the form of some $80 billion in new funding pledged by the Biden administration as part of its social spending packages. However, that legislation came to a standstill in Congress.
All of this resulted in a huge IRS backlog entering 2022, with some 6 million unprocessed individual returns on its lap.
“The IRS right now has unacceptable backlogs and the customer service that people are receiving is not what the American public deserves,” White House press secretary Jen Psaki said in late January. “The agency has not been equipped with the resources to adequately serve taxpayers in normal times, let alone during a pandemic.”
What Does the IRS Backlog Mean for You?
Naturally, these issues are going to filter down to taxpayers. Here are a few of the most pressing impacts the IRS and experts have warned about:
- The processing of 2021 returns could be delayed.
- 2021 refunds could be delayed, too.
- The IRS’s telephone service could be extremely difficult to navigate. (The National Taxpayer Advocate claims 2021’s answer rate was roughly 11%.)
Experts have some advice and warnings for taxpayers dealing with these issues as the IRS works through its backlog. Among their thoughts:
- File your taxes as early as possible.
- File your taxes electronically.
- Have a qualified professional prepare your taxes.
- Use the online resources at IRS.gov to get answers to your tax questions before trying to call the IRS.
- If you are going to call the IRS about the status of your 2021 return, wait at least 21 days from when you filed your taxes.
- Download the IRS2Go mobile app for news about tax changes, policy updates and other tax-related news.
- Taxpayers recieving larger refunds (five digits or more) should expect longer delays.
McManamon & Co: Making Tax Time Easier
If you still need to get your small or mid-size business’s taxes in order, it’s not too late to reach out to the pros. McManamon & Co. is a full-service firm that provides a commonsense approach to accounting, tax and business consulting services. We can do far more than filing your taxes — our tax services include minimizing your liabilities this year, and maximizing the tax code in your favor in the future.
We are here to assist with your tax, accounting and consulting needs. Call us at 440.892.8900 or contact us online today.
Tags: IRS, McManamon, McManamon & Co., taxes | Posted in McManamon & Co., small business taxes, taxes