National Taxpayer Advocate’s 2023 Report Rings Alarm on IRS Paper Processing Delays

Internal Revenue Service (IRS)

WASHINGTON, D.C. — The National Taxpayer Advocate, Erin M. Collins, has recently delivered her 2023 Annual Report to Congress, shedding light on the complexities and challenges taxpayers face due to paper processing delays at the Internal Revenue Service (IRS).

The looming crisis in paper processing:

While the IRS has been making strides toward improving taxpayer services, the report underscores urgent issues that need to be addressed regarding paper processing. Key problems identified range from delaying help for victims of identity theft to protracted wait times for processing amended returns, and even challenges in receiving telephone assistance.

Delays in Assisting Identity Theft Victims:

An alarming statistic from the report reveals that close to half a million taxpayers have their identity theft cases pending with the IRS’s Identity Theft Victims Assistance (IDTVA) unit. With an average wait time of nearly 19 months for case resolution, this poses a serious hardship to low-income taxpayers who count on tax refunds to help with living costs.

Delays in Processing Amended Tax Returns and Correspondence:

The report highlights the backlog in processing amended returns and taxpayer correspondence despite the IRS’s success in clearing the backlog of paper-filed individual income tax returns (Forms 1040). From 2019 to late October 2023, the backlog of unprocessed amended returns has ballooned from 0.5 million to 1.9 million.

Challenges in Telephone Assistance:

Taxpayers also face challenges in receiving telephone assistance. Despite the IRS reaching its target of an 85% Level of Service during the filing season, the report notes that a significant portion of calls go unanswered. In fact, merely 35% of all calls received during the filing season and 29% across the full fiscal year were answered by IRS employees. The situation was worse for tax professionals with a reported Level of Service of 34% in FY 2023 and an average wait time of 16 minutes.

READ:  IRS to Deny Thousands of Improper Employee Retention Credit Claims
Employee Retention Credit Processing Delays:

Employers eligible for Employee Retention Credit (ERC) claims often face long waits of six months or more to receive their credits or refunds. Although the IRS grapples with the need to balance thorough review against timely refunds, these current timelines pose significant difficulties for employers.

Recommendations to Address the Crisis:

Collins’ report tabled some key recommendations to tackle these challenges and enhance tax administration:

  • Developing robust online accounts for individuals, businesses, and tax professionals that let taxpayers access account information, respond to IRS notices, and receive payment reminders.
  • Focusing efforts to attract, hire, and retain qualified employees, with more pay flexibility for hard-to-fill positions.
  • Prioritizing comprehensive training for customer-facing employees who handle tasks impacting taxpayers.
  • Upgrading the Document Upload Tool (DUT) to fully automate processing of taxpayer correspondence.
  • Expanding E-Filing options to ensure all taxpayers can e-file their federal tax returns, reducing delays in refund delivery and administrative costs.
The Importance of Swift Action:

The paper processing delays at the IRS have severe implications, particularly for those depending on timely tax refunds. By implementing Collins’ recommendations, the IRS could streamline its operations, reduce wait times, and ensure taxpayers receive assistance promptly. This would not only alleviate taxpayer burden but also contribute to a more efficient tax administration system.

Ultimately, the National Taxpayer Advocate’s 2023 Annual Report underscores the urgency of addressing paper processing delays at the IRS. As it lays out valuable recommendations, the onus now falls on the IRS to implement these to improve taxpayer services, and ensure timely resolution of taxpayer issues.

READ:  IRS Clarifies Tax Rules for Employer-Provided Educational Assistance

For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News and Microsoft Start.