The understaffed and overworked Internal Revenue Service is bracing for difficulties. COVID-19 relief, child tax credits and a backlog of 2020 returns will only complicate matters.

Transcript

STEVE INSKEEP, HOST:

Tax filing season began on Monday, so we soon find out if this tax season is going to be as chaotic as the last one. In 2021, filers faced delays on returns and frustrations reaching the IRS for help by phone. COVID relief payments and the child tax credit complicated matters. And even with a filing extension, the IRS had a backlog of tens of millions of returns. So what happens this time? A Martinez asked Deputy Treasury Secretary Wally Adeyemo what to expect.

WALLY ADEYEMO: It is going to be, unfortunately, a frustrating tax season. What that means for taxpayers is that they need to make sure that they file online, that they take steps to make sure that their returns are prepared. Because unfortunately, due to the pandemic and chronic underfunding of the IRS, the IRS has fewer people to answer their phone calls and to deal with taxpayer issues. Over the last 10 years, funding at the IRS decreased dramatically. President Biden, of course, recognized this when he came into office, and that's why he's asked for a budget increase for the IRS. But until that's passed, we're going to have to deal with a frustrating tax filing season, which is why we're asking the American people to file their taxes online and to make sure they have all their paperwork together.

A MARTINEZ, HOST:

I know the IRS closed last filing season with 35 million unprocessed returns. How likely are we to see a repeat of that kind of backlog?

ADEYEMO: So as you know, last year the IRS had a difficult filing season. What they've done since then is take a number of steps to reduce the backlog, and they've taken steps this year to try and make sure we don't create a backlog. For example, Americans who received stimulus checks from the IRS or child tax credits from the IRS received letters that have information about the numbers they should put into their tax returns so that their tax returns aren't rejected, and they'll make sure that they get a refund. What we expect is that if you file your taxes online and the information is correct, within 21 days, you should get your refund back, your taxes should be done, which would help us reduce the number of backlogs for the IRS and the inventory that they have going forward.

MARTINEZ: So it sounds like going online is key here, but as you know, Deputy Secretary, that's not an option necessarily available to all Americans. So are we looking at a situation where even if the funding that the Treasury Department is asking for gets approved, I mean, is there enough time to catch up in order to prevent another massive delay?

ADEYEMO: So I want to be clear that the funding that we're asking for will likely not have an impact on this filing season. The things we're doing for this filing season is encouraging people to file online. But as you've said, not everybody has access to file online. So we're encouraging them then to go to VITA centers, which are locally located places within communities that will allow people to help file. But it's important for us to step back and realize that we're in a place where they have as many employees at the IRS today as they had in 1970s, and they also have a technology infrastructure that was based in the 1960s and 1970s.

MARTINEZ: Answering the phone - you mention that because it's been an issue. Last year, tens of millions of calls to the IRS for help went unanswered. People just simply could not get through and speak to someone - anyone for help. So what's been done specifically to address that for this year?

ADEYEMO: We're going to have more people on the phones this year, but I don't want to make it sound as if that's not going to still be a frustrating experience because when you think about it, it comes down to resources. In a normal filing season, the IRS receives about 35 million calls. Last year, the IRS received 119 million calls during filing season. So even though we're going to surge resources towards the phones, we're in a position where we just don't have enough people to meet the demand of the American people.

MARTINEZ: I know the IRS - and I'm sure I don't have to tell you this, Deputy Secretary - the IRS isn't an agency that I think a lot of Americans think of in fond terms. (Laughter) They just don't think of the IRS in a warm, fuzzy kind of way. Does the IRS - does the Treasury Department feel that right now, especially considering all the problems the last few years?

ADEYEMO: I agree that traditionally when you think about the IRS, you only think about them being the people who collect your taxes. But over the course of the last several years, the IRS employees have been at the front lines of making sure that the American people have the resources they need to get through the pandemic - over 150 million stimulus checks, over 36 million child tax credit payments. Oftentimes, these employees who are opening the mail have come in during a point where we're all facing a pandemic. So I'm grateful for their service. And I know that while this tax filing year will be frustrating, it isn't because the top people aren't working very hard.

MARTINEZ: And is there at all a concern for a tax gap, so to speak, the difference between what taxpayers owe and what the IRS is actually able to collect, considering some of the problems?

ADEYEMO: The reality is the working-class and middle-class Americans pay their taxes. The people who are the least likely to pay their taxes are the wealthiest Americans because the IRS has been unable to invest in the enforcement towards those people who have the ability to hire armies of lawyers and to avoid taxation. That's why the president's proposed $80 billion for the IRS over 10 years to invest in enforcement. So we think that the president's proposal will both help close the tax gap, but also improve services in a way that the next filing season will be less frustrating than this one.

MARTINEZ: That's Deputy U.S. Treasury Secretary Wally Adeyemo. Thank you very much for your time.

ADEYEMO: Thank you for having me. Transcript provided by NPR, Copyright NPR.

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