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IRS tax return backlog is dwindling

Image by Ag Ku from Pixabay

There's some good news for taxpayers and the Internal Revenue Service as we near the new year and 2023 tax filing season.

The IRS is making progress in working through its backlog of paper tax returns.

In a Nov. 10 update on IRS Operations During COVID-19: Mission-Critical Functions Continue webpage, the agency reports that it is "opening mail within normal time frames," and has "processed all paper and electronic individual returns" that had no errors or didn't require further review "in the order received if they were received prior to April 2022."

As of Nov. 4, the IRS page continues, "we had 4.2 million unprocessed individual returns received this year. These include tax year 2021 returns and late filed prior year returns. Of these, 1.9 million returns require error correction or other special handling, and 2.3 million are paper returns waiting to be reviewed and processed."

OK, that's still a lot of work to do. But it is progress. At the end of August, the IRS was looking at 8.2 million unprocessed individual returns.

So the updated count of 4.2 million unprocessed tax returns gets this weekend's By the Numbers recognition.

Is it enough? "The IRS is getting closer to meeting its objectives, but unfortunately, millions of individual and business returns still await processing, millions more have been pulled out due to errors or discrepancies that must be addressed, and millions of amended returns and correspondence are still awaiting processing," said National Taxpayer Advocate Erin M. Collins in a recent blog post.

But the stack of unprocessed returns is coming down. The IRS has been processing between 900,000 to 1.1 million total individual and business returns per week.

The thing that continues to slow the progress, noted Collins, is paper tax return filing. It remains a serious problem that Collins characterizes as the IRS' Achilles heel.

With about six weeks left before it shuts down its systems to prepare them for the upcoming filing season, Collins asks the key question that all of us want answered. Will the IRS be able to work through its backlog, process tax returns and correspondence quickly, and answer its phone calls at a level that substantially improves the taxpayer experience during the next filing season?

Let's hope so. We're all more than ready for what we used to call, before the COVID-19 pandemic complications, a normal tax season.

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