A watchdog monitoring the Internal Revenue Service (IRS) has issued a scathing report blaming the tax agency for delivering a “horrendous” customer experience to taxpayers in filing year 2021, including the worst ever phone service and long refund delays.
The Taxpayer Advocate Service (TAS), an independent organization within the IRS that works to help taxpayers and protect their rights, has issued its annual report (pdf) to Congress, calling the tax filing year that kicked off on Feb. 12, 2021, the most challenging year on record.
The filing year was marred by problems like processing backlogs leading to long refund delays, telephone service that was “the worst it has ever been,” and holdups in processing taxpayer responses to IRS notices that sometimes led to premature collection notices, according to the report.
“There is no way to sugarcoat the year 2021 in tax administration,” National Taxpayer Advocate Erin M. Collins wrote. “From the perspective of tens of millions of taxpayers, it was horrendous.”
In a year in which 77 percent of individual taxpayers received refunds, tens of millions of taxpayers experienced delays, driven by processing holdups. As of late December, the IRS had backlogs of 6 million unprocessed individual returns, 2.3 million unprocessed amended individual returns, over 2 million unprocessed employer’s quarterly tax returns, and around 5 million pieces of taxpayer correspondence.
Call volume to the IRS telephone helpline skyrocketed during the pandemic, with the agency’s customer service representatives (CSR) answering just 11 percent of the 282 million calls in 2021.
“Among the lucky one in nine callers who was [sic] able to reach a CSR, the IRS reported that hold times averaged 23 minutes,” the report stated, noting also that both tax professionals and taxpayers reported hold times that were much longer, fueling frustration and dissatisfaction.
Still, despite the shortcomings, the report credits the IRS for “performing well under difficult circumstances,” as in addition to its traditional work, the agency implemented pandemic relief programs, including issuing 478 million stimulus payments and Advance Child Tax Credit payments to over 36 million families.
The report also noted that the “imbalance between the IRS’s workload and its resources has never been greater,” given that, since 2010, the agency’s workforce has shrunk by 17 percent while its workload has grown by 19 percent.
Collins expressed concern about the upcoming tax year.
“While my report focuses primarily on the problems of 2021, I am deeply concerned about the upcoming filing season,” Collins said. “Paper is the IRS’s Kryptonite, and the agency is still buried in it.”
“In the coming months, the IRS must work through its backlog of tax returns and be current in processing its correspondence while focusing on rebuilding itself to become a more efficient and taxpayer-centric organization,” she continued.
Going forward, TAS recommends Congress boost funding for the IRS, authorize the agency to establish minimum standards for paid tax return preparers, and expand the U.S. Tax Court’s jurisdiction to hear refund cases, among other recommendations.
“In the coming years, the IRS must modernize its operations to better meet taxpayer needs, reduce administrative burdens, and improve the delivery of services,” Collins said.
The 2022 tax filing season begins on Jan. 24.