According to a watchdog report, the Internal Revenue Service struggles to disburse funds as 21.3 million paper tax returns wait to be processed.
The backlog continues to surge, increasing by 1.3 million within the last 12 months despite continuous efforts to unclog the excess tax returns.
More than 90% of taxpayers file returns electronically, but about 17 million others — disproportionately the elderly — file paper taxes, furthering the swelling of the backlog. According to the report, the delays for paper-filed returns have surpassed six months, leaving many with an extended wait.
After analyzing the issues with paper returns, the watchdog group reveals “missed opportunities” for the Internal Revenue Service over the past year. The IRS had the chance to improve its efficiency with new scanning technology and they were also granted $1.5 billion from the American Rescue Plan of 2021, which could have been used to hire more employees.
The IRS announced a hiring initiative in March 2022, revealing they would add 10,000 new employees to combat the stockpile of tax returns and increasing phone calls. As of May, they have not even reached 5,000 workers.
The backlog of tax returns is likely to continue into 2023.
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Source: CNBC