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IRS Staffing Shortages Likely to Cause Turbulent Tax Season, Treasury Officials Say

Backlogs and poor customer service are likely to hamper tax season handling, officials warn.

The Biden administration is warning Americans they could experience significant difficulties during the upcoming tax season, saying staffing and other resource shortages will impair full functioning at the Internal Revenue Service. 

Taxpayers should expect a frustrating filing season, Treasury Department officials told reporters on Monday, citing both underfunding and the ongoing impacts of the COVID-19 pandemic. The officials spoke on condition of anonymity. IRS has been gutted over the last two decades, the officials said, and the agency now expects to deliver reduced customer service and accumulate backlogs in processing returns.

The Biden administration has been sounding the alarm on IRS underfunding and understaffing since it took office—including by calling for a dramatic spending and hiring surge as part of the president’s Build Back Better plan—but is now upping the stakes by previewing expected problems during tax season, which will begin Jan. 24. IRS already has a much larger backlog than the roughly 1 million unaddressed cases with which it typically enters the annual filing period. The current backlog was exacerbated by the pandemic, including new responsibilities for the agency and employee absences. 

In the last two years, Treasury said 20% of its customer service employees at IRS have been unavailable due to COVID-19 related reasons. Part of the $80 billion Biden is seeking over the next 10 years for IRS would go to customer service hiring, with the goal of answering 75% of calls that come in to the agency. During the pandemic, that figure dropped to just 7%. During the first half of 2021, IRS had one employee for every 16,000 calls that came in. 

IRS has also shed 17,000 enforcement workers over the last decade, disproportionately from highly specialized, senior examiners who typically focus on the wealthiest individuals and corporations. Its auditor workforce has reached its lowest level since World War II. The agency currently has the same number of employees as it did in 1970, Treasury officials said, despite the U.S. population growing by 60% since then. Overall, it has seen its budget decreased by 20% over the last decade. 

As a result of all of those cuts, the officials said, IRS is no longer equipped to provide adequate service to the American people. Echoing complaints from IRS Commissioner Charles Rettig and others, the officials lamented that they were particularly outgunned by wealthy tax evaders. The shortfalls can only be addressed by boosting the agency’s resources, they added. 

The Treasury officials implored taxpayers to file electronically to avoid backlogs and ensure their returns are accurate, including correct information on payments authorized as part of COVID-19 relief legislation. Americans must file their taxes by April 18.