Tax submitting: 2021 efficiency underscores the necessity for the IRS to handle persistent challenges

What did Gao discover?

The Inside Income Service (IRS) skilled a number of challenges throughout the 2021 submitting season because it struggled to answer an unprecedented workload that included offering COVID-19 reduction. The IRS started the submitting season with a backlog of 8 million private and enterprise returns from the prior 12 months to be processed together with incoming returns. The IRS diminished the backlog of returns for the earlier 12 months, however by the tip of December 2021, there have been about 10.5 million returns in course of from 2021. As well as, the IRS suspended and reviewed 35 million returns with errors primarily as a consequence of new or revised tax credit. Because of this, lakhs of taxpayers confronted lengthy delays in getting refunds. GAO discovered that sure classes of errors happen annually; Nevertheless, the IRS doesn’t assess the underlying causes of taxpayer errors on returns. Doing so will help cut back future errors, refund delays, and strain on IRS sources.

The IRS has paid out roughly $14 billion in refund curiosity over the previous 7 fiscal years, with $3.3 billion being paid in fiscal 12 months 2021. Utilizing IRS knowledge, GAO recognized sure options of refund curiosity funds, resembling amended returns. Nevertheless, the IRS doesn’t determine, monitor, and mitigate the problems that contribute to returning curiosity funds. Accordingly, the IRS is lacking a possibility to scale back prices.

Challenges With IRS Buyer Service In the course of the 2021 Submitting Season

The IRS answered extra telephone calls than in years previous, however taxpayers discovered it tough to succeed in the IRS as a consequence of larger name volumes. The IRS urges taxpayers to make use of its “The place’s My Refund” on-line software to search out refund standing info; But this software offers restricted info concerning refund standing and delays. The IRS would not have plans to modernize “The place’s My Refund,” though it may assist the IRS serve taxpayers higher, decrease name volumes, and decrease prices. The IRS’s correspondence record stood at 5.9 million by the tip of the submitting season, and has grown to greater than 8 million by early 2022. The IRS has no plans or estimates to scale back this backlog; Doing so will help cut back calls for on the IRS. Lastly, private service has declined considerably since 2015 and the IRS has not absolutely thought-about alternate options to its present private service mannequin. The IRS’s plans to enhance the taxpayer expertise — resembling by increasing digital providers — may additional contribute to the decline in in-person visits.

Why did Gao do that examine?

In the course of the annual tax submitting season, usually January by mid-April, the IRS processes greater than 150 million private and enterprise tax returns and offers phone, correspondence, on-line, and in-person providers to tens of millions of taxpayers. To accommodate the brand new regulation and supply further reduction to taxpayers, the IRS postponed the 2021 private submitting and fee deadline by 1 month to Might 17, 2021.

The GAO was requested to overview the efficiency of the IRS throughout the 2021 submitting season. This report assesses the IRS’s efficiency throughout the 2021 submitting season on (1) processing private and enterprise revenue tax returns and (2) offering customer support to taxpayers.

The GAO analyzed IRS paperwork and knowledge on season efficiency, return curiosity funds, hiring and worker additional time. Gao additionally interviewed cognizable officers.

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