A “perfect storm” of challenges facing the IRS is overwhelming switchboards and causing delays for those claiming annual tax refunds.

As staff brace themselves for the new filing season to open next Monday (January 24), taxpayers are being warned by the US Treasury to anticipate delays in processing and returns—and to be prepared for longer-than-usual wait times when attempting to contact customer services.

Given that IRS staff were only able to answer around 10% of calls last filing season, it’s fair to assume this is no empty warning.

Pressures on the IRS have been snowballing since 2019, the last typical filing season before COVID. In her most recent report to Congress, Erin M. Collins, the National Taxpayer Advocate, refers to 2020 and the 2021 filing season as “still painfully visible in the rearview mirror,” as “the most challenging filing season taxpayers and the IRS had ever experienced,” and sums it up as the “quintessential definition of a perfect storm.”

Despite COVID-related pressures and a legacy of budget cuts and staff shortages, the IRS managed to process 136 million individual tax returns for the 2021 filing season, and issued 96 million refunds totaling $270 billion—almost a match with 2019 figures.

Staff, however, also were tasked with issuing three rounds of stimulus payments last year, plus delivery of other financial relief programs aimed at easing pandemic pressures on families and businesses.

As a result, the report notes that IRS finished the previous filing season with an unprecedented 35 million individual and business income tax returns requiring manual processing—meaning that employee involvement is needed before a return can advance to the next stage in the processing pipeline. This total included:

• 16.8 million paper tax returns yet to be dealt with
• 15.8 million returns suspended, awaiting further review
• 2.7 million amended returns awaiting final processing

An update this month (January 2022) by Treasury officials warned that as of November 2021, the IRS still had around 8.6 million returns to process.

The Taxpayer Advocate’s Report acknowledges the resulting strain on IRS customer service performance and notes that, going forward, its ability to fully help taxpayers “continues to be negatively affected.”

Ms. Collins concludes that the IRS needs to focus on becoming a “taxpayer-centric organization” and “must modernize its operations to better meet taxpayer needs, reduce administrative burdens and improve the delivery of services.”

So, what can be done?

The IRS received more than 145 million calls from January 1 to May 17 last year—more than four times as many as in an average year. With caller volumes still at “record-setting levels,” taxpayers are being urged by IRS Commissioner Chuck Rettig to go online instead when they need help completing their return or chasing down late refunds. He’s reassuring everyone that, “We have invested in developing new online capacities to make this a quick and easy way for taxpayers to get the information they need.”

While filing tax returns online wherever possible is certainly sound advice, it’s unlikely that a revamped government website will be able to address all queries received from frustrated taxpayers with unique sets of circumstances, difficulties and challenges.

In high-pressure service organizations such as government departments, hospitals and banks, an omnichannel strategy can optimize the input of experienced but overstretched staff, by offering a powerful combination of efficient contact points and re-routing systems.