The Internal Revenue Service accumulated a backlog of 5 million unsorted pieces of mail during the five-week government shutdown, according to an agency watchdog report released Tuesday.
The National Taxpayer Advocate, an independent organization within the IRS, delivered an annual report to Congress that painted a dismal picture of the federal tax collector as already stretched thin trying to implement changes associated with the 2017 tax overhaul just as the shutdown hit.
Phone lines to reach the IRS for taxpayers wishing to make payment arrangement was "abysmal," the report said, with average wait times of 93 minutes. Even after the shutdown was over, 93.3% of taxpayers calling to make payment arrangements were unable to speak to a live agent, according to the report.
For the first week of the filing season, after the shutdown ended, there was a "shocking" decrease in service levels on the agency's phone lines, National Taxpayer Advocate Nina Olson wrote in the report, which was also delayed due to the shutdown. That included average wait times of 17 minutes rather than four minutes in 2018 for account management lines.
"Make no mistake about it, these numbers translate into real harm to real taxpayers," Olson wrote.
IRS workers, the majority of whom were initially furloughed during the shutdown, started the tax filing season that began on Jan. 28 inundated with unanswered correspondence and calls as well as unresolved audits and identity theft cases from the prior year.
Upon returning to work, the IRS had over 5 million pieces of mail that had not been sorted for processing, according to the report. There were 80,000 responses to the fiscal 2018 earned income tax credit audits that had not been addressed along with 87,000 amended returns waiting to be processed.
Additionally, the National Distribution Center's inventory grew to about 170,000 orders, according to the report. Despite federal employees working overtime to process about 11,000 orders a day, the IRS announced that orders on W-2 and W-3 forms were backlogged and would not ship until mid-February, even though employers were required to file these information returns by Jan. 31. The IRS recommended that employers consider filing extensions.
Due to the new tax law, the agency last year began to reshuffle resources to meet the demands of the new tax laws, including combining existing individual income form into one that would be the size of "a postcard, two pages in length," that roughly 47 million American taxpayers -- or 32% -- could use to meet their filing requirements.
"The five weeks could not have come at a worse time for the IRS -- facing its first filing season implementing a massive new tax law, with a completely restructured tax form," wrote Olson.
Most IRS workers, part of the Treasury Department, were furloughed on Dec. 21 when the partial shutdown began. At the start of the year, after facing blowback over potential delays in processing refunds, the agency committed to paying out tax refunds on time.
To make that possible, an additional 36,000 federal workers were asked back to come back to work without pay to help process refunds.
The move marked a reversal of a long-standing policy that refunds due to individuals and corporations would go unpaid while the government was shuttered.
Under previous administrations, the IRS typically didn't perform audits, pay refunds or offer assistance to taxpayers if they have questions, especially outside of filing season.
"Today's report brings into sharp relief just how difficult it is for an underfunded, understaffed agency to function at a high level when most of its workforce was locked out for a month before the start of the filing season," said Tony Reardon, the national president of the National Treasury Employees Union. "I don't know how anyone can read this report and not be alarmed at the massive amount of damage that has been done to the agency's workforce and the taxpayers they want to serve."
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