It's likely to be a frustrating tax season, deputy treasury secretary says
This week marks the start of tax filing season, and the Internal Revenue Service is expecting it to be another frustrating one.
Last year, filers faced delays on returns and challenges getting help on the phone, with COVID-19 relief payments and child tax credits complicating matters. In fact, the agency is still working its way through a backlog of millions of 2020 returns.
As NPR has reported, the National Taxpayer Advocate — the IRS' internal watchdog — said earlier this month that in 2021, the agency had a backlog of 35 million returns that required manual processing and taxpayers who called for guidance had only a 1 in 9 chance of getting their calls answered.
Deputy Treasury Secretary Wally Adeyemo told Morning Edition's A Martínez that an understaffed and overworked IRS is bracing for a similarly tough season this time around. For reference, most people have until April 18 to submit their income tax returns.
"It is going to be, unfortunately, a frustrating tax season," Adeyemo said. "What that means for taxpayers is that they need to make sure that they file online, that they take steps to make sure that their returns are prepared, because unfortunately due to the pandemic and chronic underfunding of the IRS, the IRS has fewer people to answer their phone calls and to deal with taxpayer issues."
The IRS blames budget and staffing shortages
Federal funding for the IRS has declined by about 20% in the last decade, according to the National Taxpayer Advocate.
Adeyemo says budget issues, staffing shortages and unreliable technology infrastructure have all made the agency's job more difficult — especially as its workload increases because of the pandemic. It has distributed over 150 million stimulus checks and over 36 million child tax credit payments, he notes.
The IRS received some 119 million calls last year, compared with about 35 million in a typical tax filing season, he adds. Even though the agency is going to put more people on the phones this year, Adeyemo says it simply doesn't have enough resources to meet demand.
"It's important for us to step back and realize that we're in a place where they have as many employees at the IRS today as they had in the 1970s, and they also have a technology infrastructure that was based in the 1960s and 1970s," he says.
Indeed, IRS computers are the oldest major tech systems in the federal government.
There are steps the agency and taxpayers can take to help ease the process
The IRS is asking people to file their taxes electronically if they can and to make sure they have all their paperwork together during the process.
Adeyemo acknowledges that not everyone has internet access to do so and encourages those who need it to go to community Volunteer Income Tax Assistance sites for free, low-income tax assistance.
If you file your taxes online and the information is correct, you should get your refund within 21 days, Adeyemo says. That will help the agency reduce its inventory going forward.
The agency has also taken steps to try to ease the load proactively by sending letters to recipients of stimulus checks or child tax credits explaining the numbers they should put in their returns to make sure they're not rejected.
Structural solutions would make future filing seasons run more smoothly
The Biden administration's Build Back Better Act would give the agency an additional $80 billion in funding over 10 years.
Adeyemo says that proposal would bolster the agency in many ways, making future filing seasons easier and even helping to close the "tax gap" between what people owe and what they pay.
That's because it would give the IRS more resources to invest in enforcement toward the wealthy Americans who "have the ability to hire armies of lawyers and avoid taxation."
But, as NPR's Brian Naylor has pointed out, the future of Build Back Better hangs in the balance, and lawmakers have yet to agree on a funding bill for the agency for this fiscal year.
This interview was produced by Ziad Buchh and edited by Steve Mullis.
The digital version of this story originally appeared on the Morning Edition live blog.
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Transcript
STEVE INSKEEP, HOST:
Tax filing season began on Monday, so we soon find out if this tax season is going to be as chaotic as the last one. In 2021, filers faced delays on returns and frustrations reaching the IRS for help by phone. COVID relief payments and the child tax credit complicated matters. And even with a filing extension, the IRS had a backlog of tens of millions of returns. So what happens this time? A Martinez asked Deputy Treasury Secretary Wally Adeyemo what to expect.
WALLY ADEYEMO: It is going to be, unfortunately, a frustrating tax season. What that means for taxpayers is that they need to make sure that they file online, that they take steps to make sure that their returns are prepared. Because unfortunately, due to the pandemic and chronic underfunding of the IRS, the IRS has fewer people to answer their phone calls and to deal with taxpayer issues. Over the last 10 years, funding at the IRS decreased dramatically. President Biden, of course, recognized this when he came into office, and that's why he's asked for a budget increase for the IRS. But until that's passed, we're going to have to deal with a frustrating tax filing season, which is why we're asking the American people to file their taxes online and to make sure they have all their paperwork together.
A MARTINEZ, HOST:
I know the IRS closed last filing season with 35 million unprocessed returns. How likely are we to see a repeat of that kind of backlog?
ADEYEMO: So as you know, last year the IRS had a difficult filing season. What they've done since then is take a number of steps to reduce the backlog, and they've taken steps this year to try and make sure we don't create a backlog. For example, Americans who received stimulus checks from the IRS or child tax credits from the IRS received letters that have information about the numbers they should put into their tax returns so that their tax returns aren't rejected, and they'll make sure that they get a refund. What we expect is that if you file your taxes online and the information is correct, within 21 days, you should get your refund back, your taxes should be done, which would help us reduce the number of backlogs for the IRS and the inventory that they have going forward.
MARTINEZ: So it sounds like going online is key here, but as you know, Deputy Secretary, that's not an option necessarily available to all Americans. So are we looking at a situation where even if the funding that the Treasury Department is asking for gets approved, I mean, is there enough time to catch up in order to prevent another massive delay?
ADEYEMO: So I want to be clear that the funding that we're asking for will likely not have an impact on this filing season. The things we're doing for this filing season is encouraging people to file online. But as you've said, not everybody has access to file online. So we're encouraging them then to go to VITA centers, which are locally located places within communities that will allow people to help file. But it's important for us to step back and realize that we're in a place where they have as many employees at the IRS today as they had in 1970s, and they also have a technology infrastructure that was based in the 1960s and 1970s.
MARTINEZ: Answering the phone - you mention that because it's been an issue. Last year, tens of millions of calls to the IRS for help went unanswered. People just simply could not get through and speak to someone - anyone for help. So what's been done specifically to address that for this year?
ADEYEMO: We're going to have more people on the phones this year, but I don't want to make it sound as if that's not going to still be a frustrating experience because when you think about it, it comes down to resources. In a normal filing season, the IRS receives about 35 million calls. Last year, the IRS received 119 million calls during filing season. So even though we're going to surge resources towards the phones, we're in a position where we just don't have enough people to meet the demand of the American people.
MARTINEZ: I know the IRS - and I'm sure I don't have to tell you this, Deputy Secretary - the IRS isn't an agency that I think a lot of Americans think of in fond terms. (Laughter) They just don't think of the IRS in a warm, fuzzy kind of way. Does the IRS - does the Treasury Department feel that right now, especially considering all the problems the last few years?
ADEYEMO: I agree that traditionally when you think about the IRS, you only think about them being the people who collect your taxes. But over the course of the last several years, the IRS employees have been at the front lines of making sure that the American people have the resources they need to get through the pandemic - over 150 million stimulus checks, over 36 million child tax credit payments. Oftentimes, these employees who are opening the mail have come in during a point where we're all facing a pandemic. So I'm grateful for their service. And I know that while this tax filing year will be frustrating, it isn't because the top people aren't working very hard.
MARTINEZ: And is there at all a concern for a tax gap, so to speak, the difference between what taxpayers owe and what the IRS is actually able to collect, considering some of the problems?
ADEYEMO: The reality is the working-class and middle-class Americans pay their taxes. The people who are the least likely to pay their taxes are the wealthiest Americans because the IRS has been unable to invest in the enforcement towards those people who have the ability to hire armies of lawyers and to avoid taxation. That's why the president's proposed $80 billion for the IRS over 10 years to invest in enforcement. So we think that the president's proposal will both help close the tax gap, but also improve services in a way that the next filing season will be less frustrating than this one.
MARTINEZ: That's Deputy U.S. Treasury Secretary Wally Adeyemo. Thank you very much for your time.
ADEYEMO: Thank you for having me. Transcript provided by NPR, Copyright NPR.
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