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Staffing Shortages Hampering IRS Processing Current And Backlog Returns–Treasury IG

The Internal Revenue Service continues to struggle with issues related to staff shortages, the Treasury Inspector General for Tax Administration said.

In a May 2, 2022, interim report on the 2022 filing season, the IG stated that “significant staffing shortages continue to hamper the IRS’s efforts to address backlog inventories and continue to affect the IRS’s ability to ensure that current year tax returns are processed timely.”

The data in the report comes from March and predates a number of appearances of IRS Commissioner Charles Rettig before Congress where he has pledged that barring another significant spike in the pandemic or some other unforeseen issue, the backlogged inventories will be back to “healthy” by the end of the year.

The report highlights the agency’s overall “IRS Get Healthy Initiatives” and states the IG will be performing separate reviews on how the agency is addressing the backlog as well as hiring shortfalls.

The IG reported that as of March 15, 2022, the IRS onboarded 521 submission processing employees, or 9.5 percent of the hiring goal of 5,437, although Rettig has testified before Congress that in-person and virtual job fairs have yielded higher numbers since then and those hired should be onboarded and complete their training in June. The IG also reported that as of March 17, 2022, the agency onboarded 3,827 accounts management employees, or 76.5 percent of the hiring goal of 5,000 for the 2022 tax season.

Five staffing concerns were highlighted by the report, including:

IG estimates that as of the week ending March 12, 2022, there are nearly 5 million paper tax returns that still need to be processed. Through March 4, for the 2022 filing season, the IRS received nearly 55 million returns, including 1.5 million paper returns, which is 15 percent lower than the paper returns received in roughly the same window (March 5, 2021) during the previous year’s tax filing season.

As of March 4, the IRS has issued about 38 million refunds totaling $129.2 billion. Both represent increases from the same time in the previous tax filing season through March 5 that had about 36 million refunds issued totaling $107.8 billion.

Rettig Defends Budget Request Before Senate Appropriations Committee

Internal Revenue Service Commissioner Charles Rettig appeared May 3 before the Financial Services and General Government Subcommittee of the Senate Appropriations Committee to defend the White House budget request for fiscal year 2023.

During the hearing, Commissioner Rettig testified on a number of the usual topics, noting the backlog of unprocessed returns and other written correspondence should be at a “healthy” level by the end of the year, assuming no other spikes in the pandemic or other unanticipated issues, as well as improvements to the workforce due to direct hiring authority granted by Congress, and the need for more funding to update and improve the IT infrastructure. He also touched on the need for more enforcement personnel to help close the tax gap, reiterating that enforcement will be targeted toward the wealthy who are avoiding paying taxes and not the low and middle income taxpayers.

FAQs Released on Energy Efficient Home Improvements and Residential Clean Energy Property Credits, FS-2022-40

The IRS has released frequently asked questions (FAQs) about energy efficient home improvements and residential clean energy property credits. The […]

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FAQs Released on Energy Efficient Home Improvements and Residential Clean Energy Property Credits, FS-2022-40

IRS, DOL Renew Employee Misclassification Memorandum of Understanding

The Internal Revenue Service and the U.S. Department of Labor announced they have renewed a memorandum of understanding (MOU) under […]

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Transitional Guidance on Broker Digital Asset Reporting Provided, Announcement 2023-2

The Treasury Department and IRS have announced that brokers are not required to report additional information with respect to dispositions […]

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IRS Completes Final Corrections on 2020 Unemployment Compensation Tax Payments, IR-2023-2

The IRS recently completed the final corrections of tax year 2020 accounts for taxpayers who overpaid their taxes on unemployment compensation received in 2020. […]

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FL - Additional guidance issued on tax relief for property made uninhabitable by Hurricanes Ian or Nicole

The Florida Department of Revenue has issued additional guidance regarding property tax relief for residential properties rendered uninhabitable for 30 […]

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FL - Additional guidance issued on tax relief for property made uninhabitable by Hurricanes Ian or Nicole

IRS Reminds Taxpayers to Check Tax Withholding Now to Avoid Paying Future Quarterly Estimated Payments, FS-2023-1; IR-2023-10

The IRS reminded taxpayers who earn wages to use the Tax Withholding Estimator tool to adjust their 2023 withholding. Checking now and […]

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2023 Standard Mileage Rates Released, Notice 2023-3

The IRS released the optional standard mileage rates for 2023. Most taxpayers may use these rates to compute deductible costs […]

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Inflation Reduction Act Triggers Numerous Tax Form Changes

The passage of the Inflation Reduction Act in 2022 has triggered changes to many tax forms, tax form instructions, and […]

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FL - Taxpayer properly applied cost-of-performance rule to its income producing activities

An out of state subsidiary (taxpayer) of a nationwide online and brick-and-mortar retailer (retailer) properly sourced its service revenue under […]

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FL - Guidance provided on tax relief for properties made uninhabitable by Hurricanes Ian or Nicole

Florida provides guidance regarding property tax relief for residential properties rendered uninhabitable for 30 days or more due to Hurricanes […]

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FL - Guidance provided on tax relief for properties made uninhabitable by Hurricanes Ian or Nicole