April 11, 2022

Ted Knutson

The Internal Revenue Service was plagued by taxpayer service problems last year including refund delays, scant online refund information, and a decline in in person service, the Government Accountability Office asserted in a new report.

The refund delays were blamed on an unprecedented volume of returns requiring manual review with similar tax credit errors and the IRS suspended and reviewed 35 million returns with errors primarily due to new or modified tax credits.

The errors, which can be made by both taxpayers and the IRS, increased from the COVID-19 legislation, according to the study, since the new provisions of the tax law are new to IRS, paid preparers, and taxpayers, and can make the overall returns process more complicated.

“As a result, millions of taxpayers experienced long delays in receiving refunds,” the authors of the GAO report said.

At the end of the 2021 tax filing season in December, IRS still had about 10.5 million returns to process.

GAO faulted the IRS for not estimating how long it would take to resolve the backlog of mail correspondence from taxpayers.

“Providing such estimates periodically, and communicating this information to taxpayers and stakeholders, will better set taxpayer expectations for a response as well as potentially reduce further calls or correspondence follow up from taxpayers,” the study asserted.

The correspondence inventory the IRS expects at the end of the 2022 fiscal year exceeding 10 million, is more than five times the volume of correspondence as of the end of fiscal year 2019 and more than three times the inventory as of the end of fiscal year 2020.

The decline in in-person services, GAO noted started in 2015 before offices were closed as a result of the pandemic as the agency has stressed alternative choices for service.

In 2015 the agency served 5.5 million taxpayers in person. That number declined to 700,000 during 2020 with decline primarily due to its shift from walk-in service to appointment-only service.

“Developing and communicating a plan for how it will provide in-person service to taxpayers will better position IRS as it considers expanding and changing other service options, such as virtual service.

The IRS has said it intends to more broadly implement video conference appointments for taxpayers so that they can work with an IRS specialist using a computer, tablet, or mobile phone from the taxpayer’s home.

To lessen the problems, the report by the investigative arm of Congress recommended IRS find out the causes for the taxpayer errors on returns, modernize its online “Where's My Refund” application; address its backlog of correspondence; and assess its in-person service model.

“While 2021 was a trying year for IRS, it can address its persistent challenges to better serve taxpayers and manage future difficulties,” GAO said.