Challenges for Taxpayers Filing in 2022

Challenges for Taxpayers Filing in 2022

INSIGHTi

Challenges for Taxpayers Filing in 2022
Updated April 25, 2022
In her latest report to Congress, National Taxpayer Advocate (NTA) Erin Collins described 2021 as the
“most challenging year taxpayers and tax professionals have ever experienced.” Central to those
challenges were large backlogs of unprocessed tax returns and unanswered taxpayer correspondence,
mostly from the 2020 tax year. The backlogs meant that millions of taxpayers encountered delays in 2021
in having their returns processed, receiving refunds, and corresponding with the IRS about tax issues.
Similar challenges have materialized in 2022.
This Insight discusses some challenges many taxpayers are facing in 2022 and the steps the Internal
Revenue Service (IRS) is taking and plans to take to lessen such challenges now and in the future.
Possible 2022 Taxpayer Challenges
So far in 2022, many taxpayers have had concerns about two issues in particular:
 the availability of helpful and timely IRS customer telephone service; and
 delays in having their returns processed, receiving refunds due, and resolving tax issues
through correspondence.
IRS’s Telephone Assistance
One way the IRS helps taxpayers fulfill their tax obligations is through toll-free telephone assistance
during a filing season. IRS’s customer service representatives (CSRs) help taxpayers understand current
tax law, resolve tax account problems, and respond to IRS compliance notices.
IRS’s ability to provide timely phone assistance has long been a source of concern for many taxpayers
and tax practitioners. From FY2015 to FY2020, the percentage of taxpayer calls to customer service lines
that got through to a CSR averaged 60.5%. During FY2021, however, this level of service dropped to an
all-time low: According to the NTA, 11% of callers to IRS’s customer service lines were able to speak
with a CSR. Unusually high call volume and a shortage of CSRs explained much of this low level of
service.
Millions of taxpayers are likely experiencing similar difficulties in obtaining timely phone assistance
from the IRS in 2022. Numerous taxpayers have sought information on the status of their returns and
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refunds from the 2021 tax year, as they did with the 2020 tax year. Many also have needed help getting
the third round of economic stimulus payments they were eligible to receive in 2021 but did not. Then
there are those who received advance child tax credit payments in 2021; an issue for some recipients has
been reconciling the amount they received with the amount they can claim on their tax returns.
IRS Processing, Refund, and Correspondence Delays
A major source of frustration and confusion for many taxpayers in 2021 was lengthy delays in having
their returns processed, receiving refunds, and corresponding with the IRS about a variety of tax matters.
Such delays are continuing for many taxpayers in 2022. The backlog of returns and correspondence
requiring manual processing totaled 26.2 million, as of April 8, 2022. This consists of items filed or
submitted in 2021 and 2022. According to the NTA, at the end of an average filing season, the return
backlog is below 1 million.
There are several reasons for this backlog. One was the slowdown in IRS’s operations in 2020 and 2021
caused by the COVID-19 pandemic. Additionally, the IRS delivered three rounds of economic stimulus
payments in 2020 and 2021 and implemented an advance enhanced child tax credit for the second half of
2021. On top of these developments were the significant cuts in IRS staffing and inflation-adjusted
funding since FY2010.
The IRS says that it is processing 2021 returns while it works through its backlog of prior-year returns.
Still, the agency’s workforce and technological constraints make it possible that 2022 may end with
another large backlog of unprocessed returns and unopened taxpayer correspondence. To minimize the
risk of processing and refund delays, the IRS recommends that taxpayers electronically file their 2021
returns and provide direct deposit information for refunds or payment of additional tax.
IRS’s Efforts to Reduce Return and Correspondence
Backlogs
The IRS has taken several steps intended to accelerate the reduction of tax return and correspondence
backlogs and prevent future large backlogs.
To speed up the elimination of those backlogs, the IRS has reassigned 1,200 employees from other
divisions with experience in accounts management to help process returns, amended returns, and taxpayer
correspondence from 2021. They make up an “inventory surge team” that could operate through the end
of September 2022. Other such teams may be formed. Employees assigned to work on inventory
reduction are subject to mandatory overtime.
The IRS has also taken several measures that might reduce the probability of future large return and
correspondence backlogs. It recently announced the cancellation of a planned closure of the IRS
processing center in Austin, TX, in 2024. The closure was part of a consolidation plan the IRS adopted in
2016. This decision retains IRS’s current processing capacity.
Another measure is for the IRS to hire 10,000 employees in FY2022 and FY2023, through an expedited
process. The plan is to pay for the new hires with funds in IRS’s current budget. The new hires are to fill
80 different positions, ranging from entry-level clerical workers to software engineers and tax attorneys.
IRS management hopes such a hiring surge will trigger a stronger effort from current employees to reduce
the return and correspondence backlogs. Owing to the months of training required for many of these
positions and the reported difficulty the IRS had in 2021 hiring new employees for accounts management,
there may not be enough time for new hires to spare millions of taxpayers lengthy delays in receiving
refunds they are due in 2022.

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Author Information

Gary Guenther

Analyst in Public Finance

Disclaimer
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