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TaxWatch: IRS wants to clear its tax return backlog this year — but now it needs to hire more people

Staring at a mound of unprocessed mail and tax returns running in the millions, the Internal Revenue Service said Thursday it’s got “aggressive” plans to clear the backlog before 2022 is through.

Now it’s got to hire all the people to do it.

The agency is planning to hire more than 5,000 people this year to work at its three processing sites in Austin, Texas; Kansas City, Mo.; and Ogden, Utah. The agency has the authority to directly hire the workers, a move to speed up the bureaucracy that usually comes with federal job hires.

Job fairs at the three sites begin next week and run through early April, the IRS said Thursday. The annual salaries for the entry-level positions, with no prior tax experience needed, range from the low $20,000s to the upper $40,000s. In a tight labor market, some observers wonder how many applicants the IRS can get with lower-end salaries.

The IRS is hoping it’s enough. The agency is also reassigning staff in “surge teams” to help cut the backlog.

The IRS is planning to hire another 5,000 workers throughout 2023, according to the Thursday announcement from the IRS and Treasury Department.

“To ensure inventory is back to a healthy level for next filing season, we are leaving no stone unturned — taking an all-hands-on-deck approach to ensure as many employees as possible are dedicating time to return processing. This includes bringing on new employees and reassigning current IRS employees to process inventory,” IRS Commissioner Charles Rettig said in a statement.

As of early February, the tax agency had 23.5 million pieces of inventory — tax returns and correspondence — it had to work through. That includes 5.4 million paper returns received last year and another 3.1 million paper returns this year, according to a count from the IRS’s National Taxpayer Advocate Erin Collins. She’s previously called paper the IRS’s “kryptonite.”

The IRS has been struggling with a backlog during the pandemic as it temporarily closed its offices, distributed three rounds of stimulus checks and one wave of advance Child Tax Credit payments.

The agency did that while handling tax seasons for 2020, 2021 and 2022 with a workforce that’s decreased since 2010, as well as a budget that’s decreased in that same timeframe when accounting for inflation.

The IRS had almost 82,000 employees, including more than 10,000 temporary and seasonal staff, in fiscal year 2021.

The House of Representatives passed a $1.5 trillion spending bill late Wednesday that includes $12.6 billion for the IRS’s operations during fiscal year 2022. That’s a $675 million raise from the enacted amount for the IRS from one year earlier, according to the Appropriations Committee.

The bill funds the government through Sept. 30 and the Senate needed to to pass it by early Saturday morning to avert a government shutdown. Thursday evening, senators passed the bill, which also includes $13.6 billion in emergency aid for Ukraine as Russia’s invasion continues.

The IRS’s proposed hiring spree is a major part of its efforts to cut the backlog and ease taxpayer frustration. But it’s not the only step.

The agency has stopped sending out certain taxpayer notices that would just generate more confusion and more paperwork.

On Thursday, the IRS said it’s been using voice and chat bots to try helping people who call the IRS and are on hold. Last year, customer-service representatives were only able to answer 11% of the record 282 million calls into the IRS, Collins said.

The English and Spanish-language chat and voice bots can assist on questions about topics including one-time payments and collection notices. The IRS says it’s planning on more services later this year to give taxpayers alternatives instead of waiting on hold.

Next week, Rettig is scheduled to testify before Congress on how the 2022 filing season is going. As of late February, the IRS processed 43.8 million returns and issued 29.7 million refunds for an average $3,473, its statistics showed.

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