IRS Under Fire: Major Delays and Service Issues Exposed in New Report

Ongoing IRS Challenges

The National Taxpayer Advocate, an independent organization within the IRS, has recently released a report that uncovers significant problems affecting the IRS's ability to serve taxpayers. The report highlights the following key issues:

Major Delays in Processing Claims

• Employee Retention Credit claims are facing massive delays, with a backlog of 1.2 million claims pending as of October 26, 2024. Many businesses are waiting for over a year to receive these crucial funds.

Identity Theft Cases Take Years to Resolve

• The average resolution time for identity theft cases has stretched to nearly two years, impacting close to 500,000 taxpayers. This is an increase from 19 months in the previous fiscal year.

Frustrating Refund Delays

• Taxpayers are experiencing significant delays in refund processing due to the IRS receiving over 10 million paper-filed Forms 1040 annually. The transition to automated processing is ongoing but not yet complete.

Inadequate Taxpayer Services

• The report notes that while there have been improvements, the overall Level of Service for IRS toll-free lines was only 56%, with just 31% of callers reaching an assistor.

Staffing Challenges Persist

• The IRS continues to struggle with employee recruitment and retention, causing delays in hiring new staff, which affects service delivery.

Recommendations for Improvement

The National Taxpayer Advocate has proposed several recommendations, including:

• Timely processing of claims for refunds or credits.
• Increased funding for technology upgrades.
• Establishing competency standards for tax return preparers.

Positive Note

Despite these challenges, there has been some good news. National Taxpayer Advocate Erin M. Collins noted improvements in the taxpayer experience since 2020, with better service and shorter wait times reported in 2024.

Filing Tips

1. Ensure all documents (W2s, 1099s) are ready before filing.
2. Consider using Free File to file electronically.
3. Opt for direct deposit to speed up refunds.

For more assistance, taxpayers can contact the Local Taxpayer Advocate in Indiana at 317-685-7840 or visit the IRS website for additional resources.