IRS to hire 10,000 more people amid backlog

The Treasury Department announced plans Thursday to hire 10,000 more IRS employees, which the tax agency vowed to use to try to solve an unprecedented backlog that’s left millions of Americans without the refunds they believe they are owed.

The new hires are part of what the agency is calling an “all-hands-on-deck” approach, which includes assigning current employees to new “surge” teams to go through a mountain of paper returns and paying overtime to 16,000 employees to process returns and answer taxpayers’ correspondence.

Biden administration officials say demands of the coronavirus pandemic and years of budget cuts hollowed out the IRS, leaving it struggling to handle last year’s workload. Millions of returns filed in 2021 were still unprocessed at the start of this year, just as the new year’s returns started pouring in.

The normal backlog heading into a new filing season is “well under one million pieces of inventory.” This year, it was “more than 15 times as large,” the Treasury Department said.

“To ensure inventory is back to a healthy level for next filing season, we are leaving no stone unturned — taking an all-hands-on-deck approach to ensure as many employees as possible are dedicating time to return processing,” IRS Commissioner Charles P. Rettig said.

As of 2020, the IRS reported having about 80,000 full-time positions, about 20,000 fewer from a decade earlier.

The spending bill that’s pending on Capitol Hill includes the largest increase in IRS spending in decades.

Government officials not only blamed Congress for underfunding the IRS but also said taxpayers themselves bear responsibility for the backlog because they make too many mistakes on their returns.

An error-free electronic return can be processed within 21 days, but even small errors end up requiring a manual review by an employee, slowing things down.

Part of the agency’s new plan is to send letters to taxpayers trying to give them a sense of stimulus payments or tax credits they may have gotten during the pandemic. The hope, the agency said, is to cut down on errors on that part of the form.