Outstanding cases have already spiked due to shutdown, and now thousands of employees are home and not working.
The Internal Revenue Service is taking on an array of new tasks in response to the novel coronavirus pandemic, which its watchdog said on Friday will likely lead to increased backlogs as the agency tackles tax season.
The delays will come as IRS is rolling out payments this week to Americans across the country as part of the recent economic stimulus package and as the agency adjusts to a tax filing deadline delayed by three months. The IRS has closed Tax Processing Centers, Taxpayer Assistance Centers and other offices nationwide. The Treasury Inspector General for Tax Administration promised to monitor “the challenges the IRS faces to implement the delay in tax return filing and payments to July 15, 2020, as well as likely backlogs.”
The state of the workforce could also contribute to a slowdown in operations, with thousands of employees home on administrative leave due to evacuation orders and a lack of telework capacity. Of the offices that are still open, half of employees are home to “enhance social distancing.” At agency call centers, where many employees are not currently working, the IG said IRS is still “testing options for telephone assistors to telework.”
Since fiscal 2010, the agency's budget had decreased by about 20% and there are about 20% fewer employees. The number of tax returns the agency received increased by 9% over the same period.
IRS backlogs have already spiked, up to 1.3 million “over-aged” cases as of the end of February. That marked a 36% increase over the previous year, the IG said. IRS management said the uptick was a result of the previous government shutdown as well as ongoing budget reductions. Employees who address the backlog have to split their time conducting relevant correspondence and answering the phones at IRS call centers, the IG noted. IRS said it had already initiated overtime and new hiring to address the existing backlog.
Nina Olson, who served as IRS' National Taxpayer Advocate until she recently stepped down, said modified operations due to the coronavirus are “a huge challenge” because the IRS suspended in-person visits, has reduced phone service and is encouraging people to use online services, which may be difficult for older people. She predicted taxpayers would "not be able to get through" on phone lines due to staffing cuts and employees at home and not working.
IRS has launched a program to provide taxpayers with virtual face-to-face service through online appointments, the IG said, though as of Feb. 29, only 122 taxpayers had used it. IRS ended in-person services at taxpayer assistance centers, as well as those with the Taxpayer Advocate Service, last month due to the coronavirus outbreak.
Courtney Bublé contributed to this report.