In response to pressure from Congress, 1,200 IRS employees have been dispatched to sort and process millions of outstanding 2020 amended paper tax returns. IRS Commissioner Chuck Rettig says a separate team will tackle 2021 paper returns as they come in. The backlog has been caused, in part, because the IRS suspended approximately 35 million returns due to errors. But will the IRS’s action plan satisfy legislators? The National Taxpayer Advocate, Erin M. Collins, testified before the Senate Finance Committee that the agency also needs to provide temporary penalty relief to taxpayers, suspend collections and improve communications. In addition, she said the IRS needs sufficient funding to upgrade IT systems.
She told members of the Senate Finance Committee on 2/16/22 during a hearing on IRS customer service challenges, “In releasing my Annual Report to Congress, I said that paper is the IRS’s kryptonite and that the IRS is still buried in it.” She said that taxpayers have been experiencing significant delays in receiving their tax refunds because of unprecedented IRS backlogs in the processing of original and amended tax returns. Paper processing remains the agency’s biggest challenge, and that will continue throughout 2022. As of late December 2021, the IRS still had backlogs of 6 million unprocessed original individual returns (Form 1040 series) and 2.3 million unprocessed amended individual returns (Form 1040-X. E-filed original returns have mostly worked through the backlog. A written copy of her remarks can be found at this website.
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