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The IRS, stuck in the backlog of tax returns

Scraps plan to close major processing facility

Watchdog groups warned the tax collector that closing the Austin facility could have dire consequences for families who rely on tax refunds. The Internal Revenue Service on Thursday scrapped plans to close one of its three remaining tax processing centers amid a backlash over an unprecedented backlog of unprocessed tax returns that threatens to derail the US tax-filing season. 2022. IRS leaders announced plans in 2016 to close the Austin facility to cut costs at the long-underfunded agency and redirect resources to online tax filing services. Nearly 90 percent of taxpayers file their returns online, a number the agency is trying to increase to improve efficiency and accuracy. But that still leaves tens of millions of paper returns for the IRS to process in hubs like Austin. And the agency has fallen behind: It has a backlog of 24 million tax returns, with some refunds held for 10 months or more. Eight in 10 taxpayers received refunds in 2021, IRS data shows, and a delayed refund can have profound consequences: Millions of taxpayers depend on that money for basic living expenses, and delays can have a lasting impact on income. households that have no cash and no taxpayers. who build their rebates into their financial plans. Critics of IRS plans to close the Austin facility by 2024, including the agency's inspector general, the National Taxpayer Advocate Service and congressional Democrats, have warned that slowing down the agency's operations could create difficulties. significant financial gains for millions of families. It could also cause slowdowns at the two remaining processing centers in Utah and Missouri, they warned. The agency had already closed another facility in Fresno, California, in September. “To ensure there is sufficient capacity to better serve the nation's taxpayers, the IRS now believes that having three [shipment processing] sites is the best approach. As a result, the IRS decided to cancel the Austin consolidation when it completed its annual review in January 2022,” the agency wrote in a memo to Congress, obtained by The Washington Post.

“While the decision to keep Austin open is based solely on the results of the revalidation analysis, it also aligns with feedback received during a recent audit by the Treasury Inspector General Tax Administration, as well as concerns expressed by the Office of Taxpayer Advocates and the National Union of Treasury Employees”. Tax processing centers are massive buildings where civil servants open mail, manually enter taxpayer data from handwritten returns, manage correspondence and handle the most essential steps. But the staff and resources at those facilities have shrunk over time along with the IRS budget.

The agency's annual funding from Congress has fallen 20 percent adjusted for inflation since 2010, according to the Congressional Budget Office, and it has lost more than 22 percent of its workforce. Almost 17,000 of its 78,000 employees are eligible for retirement, and it projects that 5,590 of them will retire in 2022. IRS hiring hasn't kept pace with separations for years, experts say, and agency employees are often poached by the private sector to help clients navigate the country's Byzantine tax code. Downsizing of the IRS workforce coupled with outdated equipment (old mail scanners cost the agency $56 million in 2021 because the agency couldn't determine if the envelopes it received contained checks) have contributed to the backlog. . "We applaud the IRS for finally recognizing that those employees in Austin are essential to the agency's ability to break out of the backlog of returns and mailings, and that there is an ongoing need for the IRS to retain this ability," IRS Employees National Union Treasure. President Tony Reardon said in a statement. “This decision, albeit later than we would have liked, allows employees in Austin to stop worrying that their jobs are about to disappear and instead focus on delivering a successful tax season, the third of the pandemic.” The IRS's two "most serious problems" ahead of the 2022 filing season were its delays in processing returns and issuing refunds, and its delay in recruiting, hiring and training, according to the National Taxpayer Advocate Erin M.Collins. Congressional Democrats had written to IRS Administrator Charles P. Rettig earlier Thursday to ask him to reverse course on the Austin shutdown. Ten senators and 15 members of the House urged Rettig to at least postpone the shutdown until the taxman could resolve his backlog and hiring issues. “While we understand that these consolidation efforts are driven by the declining trend in the number of paper returns and cost savings of $94 million, we believe that these efforts no longer make sense, especially given the large number of backlogs. ​and the hiring challenges that have plagued the IRS over the past two filing seasons,” the lawmakers wrote.

The inspector general went further in a report released in early February, calling the projected savings "relatively insignificant" compared to the IRS's $12 billion budget and "the additional burden that will be placed on taxpayers as a result of the continuing and new work delays that will result from processing returns on the move.” Closing the Austin facility, according to the inspector general, would have seriously hampered the IRS's ability to handle its paperwork and led to a significant reduction in the agency's workforce. When the Fresno tax processing center closed, the agency lost 1,445 employees. At the Austin facility, the inspector general reported, the IRS had already lost hundreds of employees in key positions because the agency had delayed finalizing its plans. The workers went to other jobs. “Keeping our IRS Center up and running means more tax returns will be processed in a timely manner with faster refunds and Child Tax Credit payments,” said Rep. Lloyd Doggett (D-Tex.), whose district includes most of Austin, in a statement. “Austin workers gain job security while the agency gains the ability to recruit more talent from Central Texas. I am pleased that our application was approved to meet both the growing taxpayer service needs and the need for job security for Austin workers."

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