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Washington D.C. – The backlog of unprocessed tax returns at the IRS is now dramatically smaller according to an internal watchdog report, which is a testament to the surge of frontline employees committed to tackling the problem and making sure the agency is better prepared for the fast-approaching 2023 tax filing season. 
 
The National Taxpayer Advocate’s annual report to Congress said the agency cut the backlog of unprocessed individual paper returns by 91.5 percent, from 4.7 million in early 2022 to about 400,000 by the last week of December. And the number of unprocessed original business returns was reduced by 69 percent. 
 
“These backlogs are upsetting to taxpayers and frontline IRS employees definitely shared in their frustration,” said NTEU National President Tony Reardon. “It is validating to see that all of their hard work – including some employees being reassigned away from their current duties – has been successful in chipping away at the stacks of unfinished returns.” 
 
The report highlights the continuing challenge of being able to hire and train enough employees to ensure a successful 2023 filing season that does not add to the backlog, and also provides taxpayers with timely and accurate customer service when needed.  
 
After a decade of budget and staffing cuts, the agency is in the process of rebuilding and modernizing, thanks to about $79 billion provided by the Inflation Reduction Act of 2022. Not only does the agency need more staff and resources to make up for those cuts, the IRS now stands to lose 52,000 people over the next five or six years to regular attrition and retirement. Understaffing translates directly to slower customer service, more backlogs and uncollected tax revenue. 
 
“We hope lawmakers take note from this report and the recent progress on the backlog that being the nation’s tax administrator is a labor-intensive process that requires well-trained customer service representatives, auditors, examiners, accountants, clerks and technicians around the country to make sure the tax code is fully and fairly enforced,” Reardon said.  
 
Legislation to cancel the long-term investment for rebuilding the IRS is counterproductive, Reardon said. The nonpartisan Congressional Budget Office estimates that rescinding most of the 10-year, $79 billion investment would cut the amount of tax revenue collected and increase the federal deficit by $114 billion.  
 
“We also appreciate the Taxpayer Advocate’s focus on expanding the agency’s Human Capital Office, which is essential for being able to onboard new hires quickly,” Reardon said. “In a competitive job market, it is also important that the IRS be able to offer adequate salaries and high-quality training to ensure employees are not lured away to jobs in the private sector.” 
 
As National Taxpayer Advocate Erin Collins wrote in the report, “The good news is that since the close of the 2022 filing season, the IRS has made considerable progress in reducing the volume of unprocessed returns and correspondence.  We have begun to see light at the end of the tunnel.” 
  
NTEU represents employees in 34 federal agencies and offices.