Depressing

TIGTA (the Treasury Inspector General for Tax Administration) came out this morning with its interim report on the 2022 Tax Filing Season.  I would love to report statistics that make me feel warm and fuzzy; instead, we’re left with more of the same: lots and lots of items sitting around in bins (both virtual and real).

One of the major issues the IRS has faced is hiring.  TIGTA allows us to give numbers to the IRS issues.  On the good side, the IRS has “onboarded” (aka hired) 3,827 Accounts Management employees out of a goal of 5,000 (76.5% of the goal).  However, the IRS hired just 521 Submission Processing employees out of its goal of 5,473 (9.5%).

The backlogs of returns remain.  Here is Figure 3 from the TIGTA report (click on the figure for a larger version):

Work Remaining to be Processed

This is depressing, and I am not changing my estimates of how long paper will take to be processed by the IRS.  If you submit a paper-filed tax return, expect it to take one year to be processed.  If you submit a paper-filed amended return, expect it to take 18 months (1.5 years) to be processed.  If your electronically filed return is unlucky enough to go through Error Resolution, Rejects, or Unpostables (which does not mean you did anything wrong), you’re looking at an average delay of four months.

The report briefly touches on the delays with IRS Account Management functions.  I’m telling clients that when a response is sent to an IRS notice, expect it to take six months to receive the response back from the IRS.  My oldest case is going on three years–it involves a C-Corporation return incorrectly processed as an S-Corporation.  The client owes tax but cannot pay it because it will be sent back to the corporation until the IRS fixes the problem!  (Yes, that has already happened.)  The file has been sent back and forth two times between the IRS offices in Ogden and Cincinnati, and I have no idea when this will be resolved.  We think this case is getting closer–the last two “we need more time” notices have noted the corporation is a C-Corporation (but I’m not holding my breath).  But I digress….

The IRS’s ability to answer telephone calls also remains poor.  The IRS says they answered 19.5% of net calls with a 24 minute average wait.  Recently, the Taxpayer Advocate said that it was about 5% of calls that were answered.  No matter, neither statistic is good, and improvement is desperately needed.

There was one bright spot: The IRS is finding more Identity Theft returns (confirmed fraudulent returns); so far in 2022, they have found 9,626 versus 2,499 found in 2021.  The IRS stopped $807.9 million of fraudulent returns this year versus $12.6 million in 2021.

The conclusions of this report are obvious.  If at all possible, efile your return.  If you do have to mail something to the IRS, bring patience (a whole lot of patience).  And if you’re Commissioner Rettig and you’re stating “everything will be cleared up by year-end,” let’s just say I hope you’re right but I really, really doubt it.

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