The IRS has pledged to work on modernizing its “Where’s My Refund” taxpayer refund tracking tool after a report from the Government Accountability Office (GAO) flagged the need for the agency to address that and other problems.
Taxpayers struggled to get help from the IRS during the 2021 filing season as telephone demand skyrocketed, online refund information was scant, correspondence tripled, and in-person service declined, said GAO, which also is nudging the agency to address underlying causes of taxpayer errors on returns.
The 2021 filing season saw an unprecedented workload for the IRS, with a backlog of eight million tax returns from the previous year, and refund delays due to an unprecedented volume of returns that required a manual review. The IRS has been able to cut into this backlog, but GAO pointed out that the agency still had millions of new 2021 returns to process at the end of last year.
“IRS reduced the backlog of prior year returns, but as of late December 2021, had about 10.5 million returns to process from 2021,” wrote GAO in a report. “Further, IRS suspended and reviewed 35 million returns with errors primarily due to new or modified tax credits.”
Meanwhile, GAO found that some categories of errors occur each year, but IRS has not assessed the underlying causes of taxpayer errors on returns.
“Using IRS data, GAO identified some characteristics of refund interest payments, such as amended returns,” wrote GAO. “However, IRS does not identify, monitor, and mitigate issues contributing to refund interest payments. Accordingly, IRS is missing an opportunity to reduce costs.”
GAO made six recommendations for the IRS, with the tax agency agreeing to four of the recommendations and disagreeing with two. The recommendations include:
- IRS business units should be directed to regularly identify, monitor, and report on the primary reasons for individual and business-related refund interest payments and associated dollar amounts;
- Develop a process to identify and analyze the underlying causes for taxpayer errors on returns and address them with input from internal and external stakeholders;
- Take steps toward reducing the amount of refund interest paid for those cases within IRS’ control;
- Work with Treasury to develop and implement a modernization plan for “Where’s My Refund” that fully addresses taxpayer needs;
- Estimate time frames for resolving IRS’ correspondence backlog, monitor and update these estimates periodically, and communicate this information to taxpayers and stakeholders; and
- Develop and communicate a plan for providing in-person taxpayer services relative to IRS’ plans for expanded virtual customer service options, and costs and benefits.
IRS disagreed with the recommendation for developing a process to identify and analyze underlying causes for taxpayer errors on returns; and the recommendation to regularly identify, monitor, and report on the primary reasons for refund interest payments and associated dollar amounts.