Despite advances, the IRS still has a large backlog of returns, according to a taxpayer advocate.

LAS VEGAS (AP) — The IRS has made major improvements after a rough three years for taxpayers. However, according to National Taxpayer Advocate Erin Collins, there is still work to be done.

“This filing season has probably been as close to normal as possible,” she remarked at the annual convention of the American Institute of Certified Public Accountants, held June 3-6 in Las Vegas.

Despite the improvements in customer service, the agency is still dealing with a large backlog, including revised returns, files in suspense, and other communications, she added.

Collins is the director of the Taxpayer Advocate Service, an independent IRS entity that provides one-on-one assistance and advocates for structural improvements. The national taxpayer advocate oversees around 80 countrywide offices for troubled filers, consults with the IRS, reports to Congress on the agency’s major issues, and proposes legislative suggestions.

The IRS is presently dealing with 3.7 million modified returns, 6.8 million “in suspense” with missing information, and 5.3 million pieces of communication, according to Collins. “Those are some pretty big numbers that the IRS is still dealing with,” she explained.

This season, the agency prioritized phone service, answering more than 85% of calls from critical phone lines in under five minutes.

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“But it did come at a cost,” Collins explained because phone assistants handle paper returns while taking calls. “The problem is, we are now back to a backlog of paper correspondence and amended returns, similar to where we were a year ago,” she explained.

Collins was also concerned about the agency’s intentions for additional initiatives in light of the present backlog.

The IRS revealed in May that it was exploring a free online direct filing system, with a pilot program set to begin for select taxpayers during the 2024 filing season.

According to a 2022 study mentioned in the agency’s feasibility assessment, nearly three-quarters of taxpayers showed interest in a free IRS-provided filing system.

We cannot enter the next filing season with yet another backlog.

Collins believes the IRS has the technological capabilities to execute direct filing, but she is concerned about the timeline. “IRS is still not out of the hole that they have dug,” she said to CNBC.

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“We cannot go into the next filing season with yet another backlog,” she stated. “We need to get that word out of the IRS’s vocabulary.”

“No more backlogs,” she concluded.

Collins also mentioned state tax issues, particularly in the more than 40 states that rely on federal returns for citizens’ state files. Decoupling such returns might generate problems for state tax administration, she says.

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