SUMMARY
- The IRS is currently wrestling with a considerable backlog: 3.7 million amended returns, 6.8 million filings with missing information, and 5.3 million correspondences.
- The IRS has proposed a free online direct filing system, potentially launching a pilot program for select taxpayers during the 2024 filing season.
- Concerns raised over potential challenges if federal returns are decoupled from state filings, affecting over 40 states.
In the aftermath of an arduous triennial period for taxpayers, the IRS has embarked on a commendable journey of reform. However, it appears the path to perfection is yet to be fully traversed, as outlined by the voice of the taxpayers, National Taxpayer Advocate Erin Collins.
Casting her opinion at the American Institute of Certified Public Accountants’ annual conference in Las Vegas, Collins stated, “The present filing season has endeavored to approximate normalcy to the greatest extent feasible.” Yet, the beacon of customer service improvements has not fully dispelled the shadows of a lingering backlog. This encompasses amended returns, pending filings, and other unresolved correspondences.
According to Collins, the IRS is currently grappling with an alarming backlog: 3.7 million amended returns, 6.8 million “in suspense” due to missing information, and 5.3 million correspondences awaiting response. She declared, “These are indeed substantial figures that the IRS continues to grapple with.” In the face of this, the agency has prioritized their phone service, successfully answering more than 85% of calls from essential phone lines in less than five minutes.
Collins expressed her apprehension regarding the IRS' ambitious plans for introducing new programs, given the current backlog. In May, the agency unveiled plans for testing a cost-free online direct filing system, which is expected to be piloted with select taxpayers during the 2024 filing season. Despite the enthusiasm shown by nearly three-quarters of taxpayers for such a service, as indicated in a 2022 survey, Collins harbors reservations concerning the implementation timeline. She urged, “We need to eliminate 'backlog' from the IRS’ vocabulary.”
Lastly, Collins brought up the often overlooked issue of state tax challenges, particularly for the 40-plus states that lean on federal returns for residents’ state filings. Any attempt to decouple these could pose significant difficulties for state tax administration.
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