The Internal Revenue Service was plagued by taxpayer service issues last year, including refund delays, scant online refund information and a decline in in-person service, the Government Accountability Office said in a new report.
The refund delays were attributed to an unprecedented volume of returns requiring manual review with similar tax credit errors, and the IRS suspended and reviewed 35 million returns with errors primarily due to new or changed tax credits.
Errors, which can be made by both taxpayers and the IRS, have increased from the COVID-19 legislation, according to the study, as the new tax law provisions are new to the IRS, paid preparers and taxpayers, and they can make the overall returns process more complicated.
"As a result, millions of taxpayers experienced long delays in receiving refunds," the GAO report's authors said.
At the end of the 2021 tax filing season in December, the IRS still had about 10.5 million returns to process.
The GAO blamed the IRS for not estimating how long it would take to resolve the backlog of mail from taxpayers.
“Providing such estimates periodically and communicating this information to taxpayers and stakeholders will better set taxpayer expectations for a response and potentially reduce additional calls or follow-up on taxpayer correspondence,” the study stated.
The mail inventory the IRS expects at the end of fiscal year 2022 to exceed 10 million, is more than five times the mail volume at the end of fiscal year 2019 and more than three times the inventory at the end of fiscal year 2020.
The decline in in-person services, the GAO noted, began in 2015 before offices were closed as a result of the pandemic, as the agency has emphasized alternative options for service.
In 2015, the agency personally served 5.5 million taxpayers. That number dropped to 700,000 during 2020 and the decrease was primarily due to its change from walk-in service to appointment-only service.
“Developing and communicating a plan for how you will provide in-person service to taxpayers will better position the IRS as it considers expanding and changing other service options, such as virtual service.
The IRS has said it intends to more widely implement video conferencing appointments for taxpayers so they can work with an IRS specialist using a computer, tablet or mobile phone from the taxpayer's home.
To lessen the problems, the report from the investigative arm of Congress recommended that the IRS find out the causes of taxpayer errors in returns, modernize its online application "Where's My Refund"; address your backlog of mail; and evaluate its face-to-face service model.
"While 2021 was a difficult year for the IRS, it can address its persistent challenges to better serve taxpayers and manage future difficulties," the GAO said.