Taxpayers Rejoice: IRS Set to Start Tax-Filing Season on Stronger Footing

The Internal Revenue Service (IRS) is set to start this year’s tax filing season on better footing than the last few years, despite the challenges caused by the pandemic, according to a new report from the National Taxpayer Advocate on January 11, 2023.

The report credits the IRS for making significant progress in shrinking its massive paper backlog from 4.7 million unprocessed returns at the end of 2021 to 400,000 as of December 23, 2022. Increased federal funding, recruitment initiatives, and new digital solutions should help address processing and customer service shortfalls. However, the report predicts it will take until midyear before major improvements in service is seen, as reported by Yahoo Finance on January 11, 2023.

Millions of American taxpayers endured unreasonably long refund delays last year, with some still waiting. For many taxpayers, getting their tax refund on time is critical, as many households count on the extra cash to help offset the rising costs of food, housing, or childcare or mitigate an unexpected emergency. The IRS failed to pay timely refunds to millions of taxpayers for the third straight year, the report found.

Based on the report by CNBC on January 12, 2023, the IRS made significant strides in reducing its backlog of unprocessed returns and correspondence, and according to the report, the IRS entered the 2022 tax year with an excess of 4.7 million original individual paper returns and 3.2 million original paper business returns. By December 23, those figures had been cut down to 400,000 and 1 million, respectively, a larger reduction than in typical years.