IRS blames pandemic, Congress for failure to process taxpayers’ returns

IRS Commissioner Charles P. Rettig acknowledged Tuesday that the tax agency faces “enormous challenges” in providing service this year, but he said taxpayers should direct their anger at Congress for not providing enough money.

Mr. Rettig said the COVID-19 pandemic also took a toll but cost-cutting has starved his agency of the employees and technology it needs to process returns, answer questions and chase after “ultra-wealthy” tax cheats.

“Today, millions of people are still waiting for prior years’ returns to be processed and refund checks to arrive in the mail while preparing for their upcoming tax filing,” the commissioner wrote in an op-ed for Yahoo Money. “While we can’t immediately solve these significant issues, our employees are doing everything they can, and I am committed to returning to normal inventory levels before next year.”

The commissioner defended his agency after The Washington Post reported last week that the IRS had a backlog of 24 million unprocessed returns from last year. Many of those include refunds owed to taxpayers that have been blocked for months, denying Americans their money.

IRS officials also sustained a black eye this month when they had to retreat on plans to subject Americans to facial recognition checks if they wanted to access key online services such as their IRS transcripts or payment plans.

The Government Accountability Office last week reported that the agency lost hundreds of millions of dollars over the past few years because it wouldn’t pay $600,000 to fix a letter-opening machine at a service center in Kansas City, Missouri. Without an automated system, letters containing payments weren’t opened on time, so the government couldn’t file the checks quickly and lost interest payments it should have collected.

Mr. Rettig said taxpayers will suffer for the agency’s struggles.

With the pandemic affecting services, he said, the IRS received 120 million calls for assistance during filing season last year and was able to answer less than 20% of them. He signaled that is likely to continue this year.

Tax filing day is April 18.

The agency is taking some steps to work through its problems.

The IRS announced last week that it would stop sending some automated notices to taxpayers, such as warnings about unpaid balances, looming fines or payments that didn’t match filed returns. The agency said it realized in some cases that returns might be sitting in the backlog.

Lawmakers on Capitol Hill said that was a good first step and acknowledged challenges from the pandemic. Still, they said, the IRS is failing at basic communications with taxpayers.

In a letter this week to Mr. Rettig and Treasury Secretary Janet Yellen, 30 Republican senators said they are hearing from constituents who can’t find out whether their returns were received or whether they should refile.

The senators urged the IRS to give the public processing times and expectations so taxpayers know when to start worrying that communications haven’t been received.

The senators told the agency to stop issuing liens or levies “for a meaningful period of time” and to halt collections until the agency opens all of its mail to see what sort of abatement requests might be waiting.

Trouble at the IRS is nothing new.

In the early part of the last decade, as the agency dealt with fallout from the tea party targeting scandal, the agency said Congress was stripping its funding and leaving it unable to answer the phone.

By 2015, the agency said it could answer only 37% of customer service calls. Congress pumped more money into customer service, and the rate of answered calls rose to 73% in 2016.

Last year, amid the pandemic, a record 282 million calls were placed to the IRS. The agency answered 32 million of them, or 11%.

Mr. Rettig said the IRS now has the same number of employees as it had in the 1970s despite a 60% increase in the country’s population and new demands on the agency. Electronic filing has helped cut the burden, but nearly 10% of returns are still filed manually, which he said is “time-intensive.”

He said the agency’s budget has dropped 20% over the past decade. The trims to personnel have been even deeper in some cases.

In 2010, the IRS had 18,582 customer service slots, 13,879 revenue agents and 6,042 revenue officers. In 2020, it had 11,027 customer service representatives, 8,346 revenue agents and 3,040 revenue officers.

After a meeting with Mr. Rettig on Tuesday, Sen. Ron Wyden, Oregon Democrat and chairman of the Senate Finance Committee, blamed a “decade-long Republican campaign to gut the IRS and shield wealthy tax cheats.”

“Rebuilding this agency so it can both ensure taxpayers pay taxes already owed and better serve hard-working taxpayers is a top priority,” he said.

For more information, visit The Washington Times COVID-19 resource page.