North Jersey lawmakers are pressing the Internal Revenue Service to address massive backlogs in processing tax returns.
“I have sent six oversight letters to the IRS urging them to get back to the basics of opening the mail, processing returns, and answering phone calls,” said Sen. Bob Menendez, a Democrat and a senior member of the Senate Finance Committee, which oversees the federal tax agency. “No entity, public or private, touches more Americans than the IRS. That’s why we must have an IRS that works.”
Menendez said at a IRS-focused press event last month he has been “sounding the alarm” on IRS customer service issues and processing delays since June 2021.
The IRS started the 2021 tax filing season with a backlog of eight million returns from the prior year, according to a February report from the nonpartisan Government Accountability Office. Despite reducing that backlog as of December 2021, the IRS still had about 10.5 million new 2021 returns to process.
Menendez was joined at his press conference on IRS concerns by Rep. Donald Payne, Jr., Rutgers Law Tax Clinic representatives, tax professionals, and taxpayers.
“The current IRS backlog is a major issue that is causing serious delays in when American taxpayers get their tax refunds,” Payne said. “I have received multiple complaints from constituents about it.”
“My office has received hundreds of calls in the last year and a half on IRS-related matters—in fact, it is the single greatest issue that we are hearing about and it is time for the IRS to make changes,” Menendez said.
Findings in the GAO report offered a glimpse of why Payne and Menendez are getting so many complaints from constituents. In 2021, taxpayers “had a difficult time reaching IRS” by phone due to the high call volume, GAO said. In 2022 filing season, IRS anticipates only being able to answer 35% of incoming calls, the report said.
The tax agency struggled to respond to its growing inventory of taxpayer correspondence by the start of 2022, GAO said, and the report anticipated that the problem would worsen going forward.
Gottheimer Seeks IRS Fixes, Technology Upgrades
Like Menendez and Payne, the 5th Congressional District’s Rep. Josh Gottheimer is fielding calls from constituents who are frustrated with the IRS.
Gottheimer announced on Feb. 28 his “Taxpayer Action Plan,” which aims to cut bureaucratic red tape at the agency. The lawmaker spoke at the IRS Taxpayer Assistance Center in Paramus where he was joined by constituents who have been harmed by IRS’s processing delays.
As part of his plan, Gottheimer said he is demanding that the IRS fix its “antiquated bureaucracy” and create an immediate plan to process its backlog of tax returns.
24 Million Taxpayers Waiting
Nearly 24 million U.S. taxpayers, including those in North Jersey, are still waiting for the IRS to process their tax returns from last year, according to Gottheimer.
“In recent months, I have sent multiple letters to IRS Commissioner Charles Rettig and Treasury Secretary Janet Yellen urging them to get their act in gear and create an action plan to solve this massive backlog,” Gottheimer said at the Paramus event.
The congressman is urging IRS to boost resources at the Taxpayer Advocate Service—the office within the IRS devoted to taxpayers’ interests. He said TAS needs to hire more workers and train new taxpayer advocates.
Additional pieces of Gottheimer’s plan would upgrade out-of-date IRS tax processing technology and request an IRS report to Congress with their plan to address the backlog.
IRS Challenges Predate Pandemic
The COVID-19 pandemic has played a major role in IRS tax return processing delays, but North Jersey lawmakers and tax professionals note that IRS has been plagued with internal challenges for more than a decade.
In its 2021 annual report to Congress, the Taxpayer Advocate Service—an office within the IRS—noted that the IRS’s budget was cut by nearly 20% in inflation-adjusted dollars from 2010 to 2021.
Between fiscal year 2010 and fiscal year 2020, the IRS lost over 33,000 full-time personnel, which included nearly 13,400 key enforcement personnel.
“Over time as IRS staffing declined, the taxpayer population increased, and as changes were made in the tax laws, the tax gap increased,” the report said, referring to the difference between how much is owed overall in taxes owed versus taxes collected. The 2021 report said that the gross tax gap in 2019 totaled approximately $580 billion, up from an estimated $440 billion in 2013.
Surge Team, Other Successes
Menendez pointed to some small successes, though.
After he and Rep. Abigail Spanberger (D-VA) in February led a bicameral effort with 45 other Senate and House lawmakers to push for IRS action on the backlog, the tax agency announced it would put together a second “surge team” to help address the backlog and improve customer service.
Likewise, Menendez said a separate letter-writing effort he led with Sen. Cortez Masto (D-NV) prompted IRS to halt its planned closure of the IRS Austin tax processing center.
Additionally, the IRS provided temporary penalty relief to some affected taxpayers at the urging of Menendez and a group of more than 210 congressional colleagues.