NTA Report: Delays in the Processing of Paper-Filed Tax Returns

The National Taxpayer Advocate (NTA), Erin M. Collins, has released her mid-year report to Congress. The report expressed concern about continuing delays in the processing of paper-filed tax returns and the consequent impact on taxpayer refunds. At the end of May, the IRS had a backlog of 21.3 million unprocessed paper tax returns, an increase of 1.3 million over the same time last year. Further, many business taxpayers have been waiting extended periods to receive Employee Tax Retention Credits for which they are eligible, in addition to their regular refunds. Key taxpayer challenges this year included return processing delays, correspondence processing delays and difficulty reaching the IRS by phone.

Further, the report stated that the IRS has failed to make progress in eliminating its paper backlog because “its pace of processing paper tax returns has not kept up with new receipts.” Further, the IRS would have to process well over 500,000 Forms 1040 per week, over double its current pace, to eliminate the backlog this year. Additionally, the report also highlighted challenges related to correspondence processing delays and difficulty reaching the IRS by phone. During the 2022 filing season, the Service received about 73 million telephone calls. Only one out of 10 calls reached an IRS employee. Further, the report identified the following Taxpayer Advocate Service (TAS) objectives for fiscal year (FY) 2023.