If you thought tax delays were long last year, just wait: Things could be even worse in 2022, the National Taxpayer Advocate warned this week.
And that’s pretty bad considering last year was “horrendous,” Erin Collins said in her annual report to Congress on Wednesday. The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers resolve problems and recommends ways to prevent them.
- Just when you thought tax season couldn’t get worse, the Taxpayer Advocate says this year it might.
- Even before the start of tax season on Jan. 24, the IRS has a backlog of 35.3 million returns from last year awaiting processing.
- The backlog, plus another year of tax changes from the economic stimulus package passed last March, is likely to weigh on IRS processing.
The IRS begins accepting and processing returns on Jan. 24, and it’s starting the year already in the hole, with 35.3 million returns from the 2021 filing season still waiting their turn (worse than the approximately 11.7 million backlog in 2020). Much of the problem is due to paper returns, which have to be processed by hand.
“Paper is the IRS’s Kryptonite, and the agency is still buried in it,” Collins said.
To make matters more complicated, this was another year of tax changes, including accounting for government payments taxpayers received as part of the economic stimulus package passed last March. Those payments include economic impact payments (stimulus checks) and monthly payments for the advance child tax credit.
The IRS said it’s sending letters with details about the payments, but it's up to taxpayers to compare what they got with what they were entitled to, and to report any discrepancy on their tax returns.
Last year, taxpayers experienced long processing and refund delays, and it was almost impossible to get the IRS on the phone (only one in nine calls was answered, with an average wait time of 23 minutes). Correspondence with the agency also went unprocessed for many months, collection notices were issued while taxpayers waited for their letters to be answered, and at times, there was limited or no information on the online tool, Where’s My Refund?
Collins warned that the IRS could be overwhelmed again this year. The “unprecedented” delays of 2021 “could be as bad, and potentially worse, in 2022 if taxpayers do not file electronically or do not properly reconcile their monthly Advance Child Tax Credit payments or the third stimulus payment with their 2021 returns,” she said.
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