IRS ramps up hiring to alleviate tax return backlog

Market Trading EssentialsMarch 11, 2022

3 minutes read

The Internal Revenue Service plans to hire 10,000 workers this year to help tackle it’s record-low staffing issues and address millions of unprocessed tax returns, the Treasury Department said this week.

The agency intends to fill 5,000 positions in the next few months and an additional 5,000 by year end. But this could be an uphill task, as previous efforts to hire this year have been unsuccessful with just under 200 positions filled.

Staffing problems are just one of the many challenges the IRS faces this year. The agency traditionally starts the tax -filing season with less than 1 million pieces of inventory left over, according to the Treasury. This year, that backlog is 15 times as large.

“IRS employees have been working tirelessly to process backlogged returns and taxpayer correspondence. 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,” said IRS Commissioner Charles Rettig. “This includes bringing on new employees and reassigning current IRS employees to process inventory.”

Charles P. Rettig, commissioner of the Internal Revenue Service, testifies during the Senate Finance Committee hearing titled The IRS Fiscal Year 2022 Budget, in Dirksen Senate Office Building in Washington, D.C., U.S., June 8, 2021. Tom Williams/Pool via REUTERS

Texas, Utah and Missouri to host IRS job fairs

The IRS plans to host in-person and virtual job hiring events across the U.S. starting as soon as this month. Job fairs have been confirmed in Kansas City, Missouri (March 18-19); Austin, Texas (March 24-25); and Ogden, Utah (March 31-April 1).

The move follows a 6% budget increase for the IRS as part of the fiscal 2022 omnibus spending bill passed earlier this week by the Senate. The bill also gives the IRS direct hiring authority, allowing it to onboard new hires quicker.

The $12.6 billion earmarked for the IRS in the spending bill is the largest funding boost for the tax agency since 2001. Approximately $2.8 billion of that would be allocated to taxpayer services.

“Congress helpfully provided hiring flexibilities in the House-passed omnibus to further expedite hiring in critical positions,” said the Treasury in a statement. “This will allow for onboarding and training new emergency teams, which will begin working on inventory within just a few weeks.”

A man walks into the Internal Revenue Service building in Washington, DC. (Credit: Andrew Caballero-Reynolds, AFP via Getty Images) — To reduce the historically high backlog in tax returns, the IRS has laid out an “all-hands-on-deck” approach by planning to hire thousands of employees this year. (Credit: Andrew Caballero-Reynolds, AFP via Getty Images)

IRS creates a ‘surge team’

Already, the IRS has repurposed 700 IRS employees at the Austin, Ogden, and Kansas City facilities to tackle unprocessed paper tax returns.

This “surge team” will add to the agency’s earlier efforts to reduce the backlog, the Treasury said, which included moving 800 existing personnel to work directly with unprocessed tax returns or correspondence since February.

The IRS has also required mandatory overtime for over 6,000 employees processing original returns. Overtime is also available for 10,000 employees processing amended returns and taxpayer correspondence, according to the Treasury.

While the IRS has hired contractors and added night shifts as well, it has only filled 179 positions out of 5,000 in the last month. The current base salary for IRS employees is $24,749, according to the National Taxpayer Advocate.

“It’s not surprising that the IRS is having difficulty finding enough suitable job applicants,” wrote National Taxpayer Advocate Erin Collins in her address to the Senate.

People wait to get assistance at the IRS service center office, in downtown L.A. (Photo by Richard Hartog/Los Angeles Times via Getty Images) — People wait to get assistance at the IRS service center office, in downtown L.A. To avoid delays, the IRS said taxpayers should file their tax returns online and set up a direct deposit to recieve their refund. (Credit: Richard Hartog, Los Angeles Times via Getty Images)

IRS doubles efforts to prevent future backlogs

The IRS kicked off the 2022 tax filing season by urgently reminding taxpayers to file electronically and choose direct deposit for refunds.

More than 160 million individual tax returns are expected to be filed for the 2021 tax year, according to the IRS. As of February 25, the IRS has processed 43.8 million of the 45.4 million returns it’s received.

To prevent further backlogs, the IRS has improved automated support and live assistance chat bots in English and Spanish to assist taxpayers with inquiries, as well as introduced an automated tool to correct return errors. That tool has helped the IRS close 1.5 million error resolution cases in a single week, according to the Treasury.

But those efforts may not be enough.

“The IRS is more backlogged than I’ve ever seen,” Robert Seltzer, Seltzer Business Management president and CPA, recently told Yahoo Finance Live. “So it’s sort of the perfect storm for the IRS — underfunding, bad systems, you name it. It’s the worst — they’re in the worst position they’ve ever been in.”