IRS Backlog and Delays Continue

The most recent National Taxpayer Advocate Objectives Report to Congress revealed that the IRS had a backlog of 21.3 million unprocessed paper returns as of May 27, 2022. The report notes that the backlog is up by more than one million returns since the previous May’s reported backlog. At the IRS’s current processing rate, it is estimated that the IRS will take nearly two years to deal with the backlog.

The accounting profession is working with IRS executives and legislators to encourage the IRS to continue to use special surge teams to expedite processing and suspend automatic compliance notices to taxpayers until the IRS can process the related returns and until there are adequate IRS resources to provide for timely resolution.

While the IRS works through its backlog, they have advised that connecting with an agent by phone will be extremely difficult. Several of the IRS’s phone lines inform callers that due to the volume of calls and lack of agents to answer them, they cannot accept new calls. Similarly, the IRS is advising practitioners and taxpayers to avoid mailing responses.

Consider a scenario where, despite filing a return or making a timely payment, you receive a notice from the IRS informing you of a deficiency. Of course, you filed the return or made the payment, but the IRS hasn’t been able to post it to their computer system, so you get a letter requiring a response within 30 days. Unfortunately, you likely won’t be able to get an agent on the phone, so your only option is to send a response by mail – that will get in line at the IRS behind 21.3 million unprocessed returns…

According to the latest data, it is taking an average of more than eight months to complete the process when a taxpayer responds to a notice. That’s more than three times the average processing time in 2019.

Schreiber Accounting and Advisory can help you address IRS service issues with comprehensive tax planning and preparation services for small businesses, individuals, and nonprofits. Contact the firm for more information.

Material discussed is for informational purposes only. It is not to be interpreted as investment, tax, or legal advice. Individual situations vary, and this information should only be relied upon when coordinated with individual professional advice.