IRS makes more progress on tax return backlog

The Internal Revenue Service provided updated details Tuesday on where it stands in its processing of millions of tax returns in its backlog, saying that as of June 10, it had processed more than 4.5 million of the more than 4.7 million individual paper tax returns received in 2021.

The IRS has come under fire for delays in processing millions of tax returns left over from last year, but the IRS has set up so-called “surge teams” to speed up processing this year while going on a hiring spree thanks to newly granted critical hiring authority. The IRS said Tuesday it is now on track to complete processing of originally filed Form 1040 (individual tax returns without errors) received in 2021 this week. Business paper returns filed in 2021 will follow shortly afterward. The IRS is continuing to work on the few remaining 2021 individual tax returns that have processing issues or need more information from the taxpayer.

The IRS also said it has successfully processed the vast majority of tax returns filed this year: More than 143 million returns have been processed overall, with nearly 98 million refunds worth more than $298 billion being issued. As of June 10, 2022, the IRS had 11 million unprocessed individual returns, which include returns received before 2022, in addition to new returns received this year for tax year 2021. Of these, 1.9 million returns require error correction or other special handling, and 9.1 million are paper returns that are waiting to be reviewed and processed. Over 143 million returns have been processed overall this year, with almost 98 million refunds worth more than $298 billion being issued.

“IRS employees have been working tirelessly to process these tax returns as quickly as possible and help people who are waiting on refunds or resolution of an account issue,” said IRS Commissioner Chuck Rettig in a statement. “Completing the individual returns filed last year with no errors is a major milestone, but there is still work to do. We remain focused on doing everything possible to expedite processing of these tax returns, and we continue to add more people to this effort as our hiring efforts continue this summer.”

IRS Commissioner Chuck Rettig

However, the IRS still has some catching up to do. The IRS is continuing to receive both current and prior-year individual returns and related correspondence as people file extensions, amended returns and a variety of business tax returns.

To date, more than double the number of tax returns await processing compared to a typical year at this point in the calendar year, although the IRS said it has worked through almost a million more returns to date than it had at this time last year. A bigger percentage of this year’s inventory awaiting processing are made up of original returns, which typically take less time to process than amended returns.

The IRS said it has greatly improved the process for taxpayers whose paper and electronically filed returns were suspended during processing for manual review and correction, a process known as error resolution. Last filing season, an IRS tax examiner could correct an average of 70 tax returns with errors per hour. With help from new technology implemented this filing season, 180 to 240 returns can now be corrected per hour. As of June 12, 2021, there were 8.9 million tax returns in error resolution. As of June 10, 2022, there were just 360,000 returns awaiting correction.

The IRS plans to continue its efforts to make progress on processing paper tax returns in the months ahead. Rettig noted that sustained increases funding for the IRS will help it add more employees to process tax returns and answer the phones as well as help improve technology and provide fair enforcement of the tax laws.

“Taxpayers and tax professionals deserve the absolute highest-quality service from the nation’s tax system,” Rettig said in a statement. “Long-term and consistent funding for the agency is critical to ensuring the IRS is prepared for future tax seasons. It’s also critical for the IRS to be ready to answer the call for the nation during the next crisis, just as the agency did delivering three rounds of historic stimulus payments and advance Child Tax Credit payments during the pandemic.”

More details on processing and other operations are available on a special page on IRS.gov.

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