(Part-2) While IRS backlogs and identity theft persist, watchdog says there is ‘cautious optimism’

Over 35 million tax returns required manual data entry or staff review at the conclusion of the 2021 filing season as the IRS recovered from decades of underfunding.

The study claims the agency has hired hundreds of personnel since 2022, but they require training. According to the 2023 Federal Employee Viewpoint Survey, 25% of IRS workers feel they are not well-trained. “It is critical that the IRS prioritize comprehensive training and ensure that new hires receive adequate training before being assigned taxpayer-impacting tasks,” Collins said.

Werfel announced in April that the IRS will use its IRA funds to invest in new technology, hire additional customer care personnel, and examine high-wealth people. The federal tax collecting agency received $80 billion under the Inflation Reduction Act, but it might be trimmed.

Republicans and the White House reached a debt ceiling and budget reduction compromise last year that revoked $1.4 billion from the agency and agreed to remove $20 billion from the IRS over two years and shift it to nondefense programs.

Collins stated in the report that part of the law's enforcement budget should be used to improve taxpayer services “to enable the IRS to make the changes necessary to transform the taxpayer experience and modernize its IT systems in the next few years.”

Werfel claimed the IRS lacks “extensive flexibility” to shift monies this way. “I encourage the IRS to put more emphasis on reducing its paper processing backlog in 2024,” Collins reported.

The IRS proclaimed Jan. 29 as the start of the 2024 filing season shortly before the report. Agency chiefs promise taxpayers improved customer service and tech alternatives and most returns in within 21 days.

Since 2013, when the IRS under the Obama administration reviewed political groups applying for tax-exempt status, additional funding has become politically problematic. The Treasury Department's internal inspector found conservative and liberal groups were closely reviewed.

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