The Internal Revenue Service is facing an even bigger backlog for this tax season than it did a year ago, with delays creating "unprecedented financial difficulties" for taxpayers, according to a report released Wednesday.
The National Taxpayer Advocate, an independent watchdog within the agency, found that delays in processing paper returns have been running six months to one year, and taxpayers are experiencing longer wait times on the telephone.
The report on taxpayer challenges, which must be submitted twice a year to Congress, comes one day after IRS announced that it is on track to eliminate its 2021 backlog of tax returns this week.
"At the end of May, the IRS had a larger backlog of paper tax returns than it did a year ago, and its pace of processing paper tax returns was slowing," National Taxpayer Advocate Erin Collins wrote in the report. .
According to the report, at the end of May the IRS had a backlog of 21.3 million unprocessed paper tax returns for businesses and individuals.
Because of how long paper returns take to process, "taxpayers who file paper returns requesting a refund in 2022 will have to wait five months or longer to receive their refunds," Collins wrote.
The agency fell short on its goal to bring on nearly 5,500 new employees to process returns, with just 2,056 employees hired, according to the National Taxpayer Advocate's report. .
Last year, only 10% of taxpayer calls were answered by a customer service representative, the report found, compared to 1 in 4 before the pandemic.
The Taxpayer Advocate report said the IRS' leadership deserves credit for dealing with "an extraordinarily complicated tax code," old technology, inadequate staffing and lingering challenges that have come from distributing COVID-19 related programs.