Section 7803(c)(2)(B)(ii) of the Internal Revenue Code requires the National Taxpayer Advocate to submit this report each year and in it, among other things, to identify the ten most serious problems encountered by taxpayers and make administrative and legislative recommendations to mitigate those problems.
This year’s report shares both good news and bad news. The magnitude of the IRS’s successes exceeded the areas of weakness in 2023, and most metrics showed the IRS made significant improvement from the depths of the COVID-19 pandemic. The IRS virtually eliminated its backlog of unprocessed original individual income tax returns (Forms 1040) and substantially improved telephone service.
However, many taxpayer service challenges remained, especially in areas that required IRS employees to process tax returns and taxpayer correspondence. Nearly half a million taxpayers waited on average 19 months for the IRS’s help resolving their identity theft issues. The IRS experienced continuing backlogs in processing amended individual income tax returns, amended business tax returns, and correspondence. These processing delays caused delays in taxpayers receiving their refunds. Additionally, the IRS struggled to balance employees between answering phones and processing correspondence. Though the IRS’s telephone service improved overall, taxpayers still struggled to get help. The IRS’s own metrics that define its telephone service success exclude the majority of calls from its calculation. For taxpayers who filed eligible Employee Retention Credit claims, they often waited six months or longer to receive their credits or refunds. The IRS must reduce the processing backlog of the claims while ensuring that it does not pay fraudulent or non-qualifying claims.
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