So, yesterday, we spoke about TIGTA auditing the IRS. Which is a pretty fancy turnaround of events.
But, today we are going to talk about the skewed view IRS has to fix its basic problems. The lack of manpower.
That’s true- it’s a real problem. Like I wrote yesterday, the IRS has 10,000 fewer staff members today than it did a decade ago. And, their computer systems are about ½ century old. Despite the fact that there are 20 million more citizens (about ½ of which are taxpayers). Oh- and 5 million more business entities.
But, it’s more than an employee shortage. It was the 35 day government shutdown at the dawn of the 2019 tax filing (2020 calendar year) season. That left it with 5 million pieces of mail that were left sitting in bins.
Oh, and then the COVID shutdown in March 2020. Which meant more unopened correspondence and filings. And, when folks work from home, that means no one opens, catalogs, or examines all the subsequent correspondence. (And, then, Congress added to their load by having the IRS dispense Stimulus Payments and Advanced Child Tax Credits. Even less time to process the mail.)
So, it’s not surprising that the IRS is sitting on 24 million pieces of correspondence and unprocessed tax returns- some dating back two years! Not to mention that phone calls are unanswered- and the wait can be hours long- and you still get disconnected before you reach a human.
And, they’re off. The IRS plans to hire 10,000 new employees. For 80 separate positions- from tax attorneys to engineers to low level clericals. That won’t solve the backlog problem until early next year- if it does at all. After all, the training period for tax examiners runs about 18 weeks (unless they can get “experienced staff” that only require 8). And, “contact service representatives”- the folks that answer the phones, log paper returns, and process correspondence- need 37 weeks of training! See why I said this is not going to make much of a dent in the backlog anytime soon?
And, it gets worse. Because the IRS is planning on hiring a bunch of folks at $ 15 an hour. (No, silly, not the tax attorneys- for which the IRS got permission to avoid the government salary cap.) Which is less than Target, Aldi’s, and Macy’s pays. And, it’s way less than those tax prep companies pay. So, what sort of employees is the IRS planning to acquire? (That probably explains why when the IRS recently posted ads for 5000 contact service reps they managed to acquire all of…200!)
The IRS is also spending bucks on overtime, in the hopes to diminish the census of 24 million pieces of unprocessed documents. But, then, there’s the 2021 tax returns coming in- which means the backlog will drop by a mite- not a mountain. Probably extending the problem until 2030, unless Congress appropriates the $ 80 billion Biden asked to improve the IRS and its computer systems. (Let’s not forget that almost 5600 folks retire this year, with another 14000 or so slated for retirement soon.)
And, we can expect the IRS budget to be hurt, as it pays millions in interest for failing to process refunds in a timely fashion. In 2020 alone, that totaled $ 435 million.
It’s not going to be pretty at the IRS for the next few years- at least.
