IRS Commissioner Charles Rettig told House members during a hearing yesterday that the IRS will process its backlog of unprocessed tax return filings by the end of 2022.
Nearly 10 million 2020 and 2021 tax returns were unprocessed as of December, meaning paper returns have not been opened and returns have not been entered into the IRS’s master list, according to the most recent data provided to Congress by the Treasury Inspector General for Tax Administration (TIGTA).
Taxpayers and their representatives have widely reported receiving IRS fines, penalties and lien notices for returns and payments that the IRS has failed to process.
Acting House Ways and Means Committee Chair Rep. Judy Chu (D-Calif.) asked Rettig if the IRS's recent implementation of "surge teams" of employees reassigned to process taxes would help the agency clear its backlog by December.
"Absolutely before December," Rettig testified. "As of today, barring any unforeseen circumstances ... if the world stays as it is today, we will be what we call healthy by the end of calendar year.”
Chu also asked about the IRS's recently announced direct-hiring authority and its plan to hire as many as 10,000 workers to address the backlog.
According to a recent U.S. Government Accountability Office report, the IRS has lost some 17% of its workforce to attrition in the past two years. Chu asked what Rettig is doing to replace agents and workers.
Rettig said the IRS is competing with the private sector, which “can bring somebody on board the next week, and with us, it's been a six- to eight-month process.” He said he hoped that direct-hire authority would enable the IRS to shorten its hiring process to a 30 to 45 days.
President Joe Biden signed an executive order raising the IRS starting wage to $20 an hour last year, but “up until the president's executive order, we were at $14.57," Rettig said.
Lawmakers also asked why the agency is not ramping up its audits of large corporations.