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Backlog of 2020 returns interferes with this year's tax filing season


The IRS is in trouble. Those are not the kind of words you would expect to hear in early January, just ahead of tax season. But the person entrusted with helping all of us better navigate the IRS says the agency did a horrendous job last year. And this year may be just as bad or worse. Erin Collins is the National Taxpayer Advocate and just delivered her latest report to Congress. Erin, welcome to the show.

ERIN COLLINS: Thank you so much.

MARTÍNEZ: All right. So give us some numbers. How bad is it at the IRS right now?

COLLINS: Yeah. The challenge we have right now, similar to last filing season, is we have a backlog or inventory of prior returns still waiting to be processed. So at the end of last year, we had approximately 11 million returns carrying over that took all the way through June of this year to get processed. We're looking at a similar situation this year. So right out of the box, the IRS is in a hole they need to dig out of.

MARTÍNEZ: So just so I can get this straight, Erin - as we're getting ready for this tax season, the IRS is still dealing with past tax seasons?

COLLINS: That's correct.

MARTÍNEZ: Wow. What's behind the backlog?

COLLINS: Well, it's a combination of things. One of the challenges is the impact of the pandemic and COVID. As you know, across the United States, offices were closing. Well, the IRS is no different. And then on top of it, we've had additional legislation that Congress has provided, which has given much-needed relief for taxpayers. But the challenge is, for the IRS, it came late into the filing season. So that impacted more procedures in the administration and the processing. And then on top of that, IRS budget has been reduced. So we have fewer employees. We have more work. And we have more challenges.

MARTÍNEZ: You're not able to respond to all the questions you're getting, right?

COLLINS: No. It's been difficult. The biggest challenge is when people call into the IRS through their phone system. Right now, we are looking at a very low percentage of folks who actually get through and have the ability to talk to a customer service representative. And even when they do get through, if your purpose is to try and get an answer of where my return is in the process, IRS is not able to answer that question.

MARTÍNEZ: Erin, ultimately, what does the IRS need to do to get out of this crisis?

COLLINS: I think one thing taxpayers can do is to help the IRS get through this process. One of the biggest challenges last year the IRS had, again, is paper. If you can file electronically, that is a huge benefit for both the taxpayer getting their return processed timely, as well as for the IRS. Also, if you can provide bank routing information and request a direct deposit, that speeds up the process as well. And the most important thing is, triple-check your numbers.

MARTÍNEZ: Erin, tax filing season is right around the corner. So how bad could things get this year?

COLLINS: I hope they can't get worse. Last year was very tough for, you know, 35 million taxpayers. And currently, as I said, we still have anywhere from, you know, six to 11 million returns waiting to be processed. And there could be a high percentage of those returns still waiting for refunds.

MARTÍNEZ: You know, Erin, dealing with the IRS, filing taxes, can be intimidating for a lot of people. And some people don't have access to an accountant. So is there any help out there for people to figure all this out?

COLLINS: Yes. I'm not sure people are familiar with, but Congress has funded, through the IRS, a organization we refer to as VITA - Volunteer Income Tax Assistance. And then we also have the Tax Counsel for the Elderly. It is free for most people. And it's an excellent way to get your returns filed correctly and filed electronically, which will eliminate some of these problems.

MARTÍNEZ: That's National Taxpayer Advocate Erin Collins. Erin, thanks a lot.

COLLINS: Thank you.

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