Pandemic led to IRS backlog of 8 million paper organization tax returns

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The Covid-19 pandemic brought on a backlog of approximately 8 million paper-submitted business enterprise tax returns at the IRS in 2020, according to a report issued Tuesday by a U.S. Treasury Section watchdog.

That signifies a 3,230% enhance relative to the finish of 2019, when the IRS experienced about 239,000 paper returns ready to be processed, in accordance to the report, published by the Treasury Inspector Standard for Tax Administration.

The delays are mainly a result of “unprecedented and drastic actions” the IRS took to secure workers and taxpayers all through the Covid-19 pandemic, the report said.

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All those steps incorporated shutting Tax Processing Facilities and other offices nationwide in early April and extending the federal cash flow-tax submitting deadline to July 15.

Backlogs largely affected work tax returns, almost 5.5 million of which ended up awaiting processing at the conclude of 2020, according to the watchdog report. Delays also affected small business tax returns for partnerships, firms, estates and gifts, fiduciaries and tax-exempt corporations, for case in point.

The enterprise tax return backlog has declined significantly, to 291,000 as of July 2021, according to a letter composed by Kenneth Corbin, commissioner of the IRS wage and financial investment division, in reaction to the report.

The IRS expanded its telework functions, hired about 3,500 new personnel in processing functions and transshipped extra than 2.3 million returns, varieties and files in between processing facilities to stability inventories and avert bottlenecks, he claimed.

“We took, and continue to choose, impressive steps to handle the accumulation of stock even though concurrently preserving the wellness and protection of our staff members and the taxpaying general public,” Corbin wrote Aug. 11.

The agency also provided incentive shell out and extra time for personnel, according to the report.

On the other hand, the IRS continues to have problems using the services of more than enough workers to go on processing tax-12 months 2020 returns, the report showed. The company experienced achieved 63% of its recruitment purpose for processing operations as of July, Corbin claimed.

“The lack of ability of the IRS to employ the service of sufficient workers will have an affect on taxpayers awaiting refunds or that have claimed pandemic business credits,” the report mentioned.