The Internal Revenue Service (IRS) reported in March that it has been chronically underfunded for more than a decade, with nearly 20% of its budget cut since 2010.
The agency noted a “historically low funding level,” which has resulted in operations lacking the necessary equipment to provide adequate service.
Additionally, agency officials noted that the pandemic posed new operational challenges. This includes the Internal Revenue Service, which was tasked with the responsibility of distributing three rounds of Economic Impact Payments to 85 percent of American households.
“As a result of these circumstances, significant difficulties have arisen. The IRS typically has well under one million pieces of inventory entering a normal filing season,” the agency said in a statement.
“This year, the IRS entered the filing season with a more than 15-fold increase in its backlog.”
United States Representative Gerald E. Connolly (D-Mass. ), chairman of the House Subcommittee on Government Operations, intends to hold a virtual hearing to examine the IRS’s operations and financial condition.
Erin Collins, the National Taxpayer Advocate, and IRS Commissioner Charles Rettig intend to testify at the hearing.
Officials want to discuss the agency’s performance during this tax season in particular.
He stated that the agency annually processes over 150 million individual and business tax returns.
“However, as the agency prepares for the 2022 tax season, it is still grappling with a massive backlog of more than 23 million pieces of correspondence from the 2020 tax season, which includes tax returns awaiting processing, suspended returns, and amended returns,” Connolly noted in a news release.
The Taxpayer Advocate Service (TAS), an independent organization that ensures taxpayers are treated fairly by the IRS, described 2021 as “the most difficult year taxpayers and tax professionals have ever encountered.”
The IRS has a long history of resource and staff shortages, according to the news release.
Between Fiscal Years (FY) 2014 and 2019, the agency reduced its budget by approximately $929 million.
Since 2010, the IRS has reduced its workforce by 22%, leaving less than a third of its enforcement agents. Additionally, there are fewer than half the customer service representatives.
The coronavirus pandemic strained the IRS even more. They were tasked with the responsibility of providing economic relief totaling more than $1.5 trillion to qualifying individuals, families, and businesses, as well as processing annual tax returns.
“Many Americans rely on their tax refunds to pay for necessities such as food, childcare, medication, and utilities,” Connolly noted.
“The hearing will look at ways in which Congress can ensure the IRS has the resources and staffing flexibility it requires to perform its duties effectively during the already underway 2022 tax season.”