IRS to hire 10,000 new employees to squash tax return backlog

The Internal Revenue Service (IRS) plans to add 10,000 new employees to its payroll, hiring 5,000 in the next few months and an additional 5,000 by the end of next year, to tackle the backlog of tax returns and unanswered phone calls caused by the pandemic.

The aim is to shrink the agency’s to-do list from more than 23 million unprocessed forms and requests down to the accustomed level of about 1 million by the end of 2022.

Seven hundred IRS employees are being immediately repurposed at several facilities to process new returns and speak directly with taxpayers, while jobs fairs for the agency have been announced in Missouri, Texas and Utah.

Additional catch-up measures include paying mandatory overtime wages for more than 6,000 employees, hiring contractors to help with processing and mailroom operations and launching new voice and chat bots to assist with simple requests and procedures.

The initiative, announced Thursday by the Treasury Department, comes on the heels of a 6 percent budget increase for the IRS as part of the 2022 omnibus spending package now making its way through Congress.

The increase includes a $225 million boost for the taxpayer services arm of the IRS, which handles the processing of annual returns. The overall budget for 2022 is $12.6 billion.

Congress “helpfully provided hiring flexibilities in the House-passed omnibus to further expedite hiring in critical positions,” the Treasury Department said in a statement, adding that the staffing options will allow for work on the backed-up inventory to begin “within just a few weeks.”

A large portion of this inventory takes the form of small errors made by millions of individual taxpayers on their tax returns, which IRS employees then need to correct by hand.

The reason for the initial pileup of these uncorrected returns, according to the Treasury Department, was a change in operations that included the closure of facilities due to the pandemic and the distribution of stimulus checks to 85 percent of US households, totaling $830 billion.

This assessment was echoed last month in the Senate Finance Committee by National Taxpayer Advocate Erin M. Collins, who testified that closed processing facilities “caused the IRS to fall behind on its inventories.” 

“Congress directed the IRS to administer several financial relief programs that required the IRS to divert resources from its core tax administration work,” she added.

The National Treasury Employees Union was notified last week of the IRS plan for a hiring surge, releasing a March 2 statement acknowledging “roughly 10,000 entry-level positions in submission processing and accounts management.”

“It is clear that understaffing in these areas contributes to the backlog in processing of tax returns and taxpayer correspondence,” National Treasury Employees Union chief Tony Reardon said.