IRS Failure: Disappointing But Easily Foreseeable

Mom's 2019 status on 3/6/21.

Some government entities, such as Foster City where I live, seem to be functioning well, but the Internal Revenue Service, long the bane of nearly everyone, seems to be cracking up.

The IRS can't even perform its basic function of processing returns. One year after I mailed in Mom's 2019 tax return, the IRS2GO app (right) continues to report that the return is still being processed. From February 18, 2021: [bold added]

A group of Republicans on the House Ways and Means Oversight Subcommittee sent a letter Wednesday to IRS Commissioner Charles Rettig complaining about the backlog of approximately 11 million unprocessed tax returns from the 2019 tax year. The backlog of unprocessed mail from the pandemic has created a ripple effect that’s continuing into this year’s tax-filing season, which opened last Friday.

The problem isn’t only with the mail, which piled up last year in trailers outside IRS facilities until IRS employees could return to their offices and open it. While most of the millions of pieces of mail have reportedly been opened, much of it remains unprocessed. That’s causing headaches for taxpayers and tax professionals alike, who are coping with past due notices sent automatically by IRS computer systems, even when payments were sent months ago, according to the investigative news site ProPublica. Taxpayers have had trouble with receiving their Economic Impact Payments from last year and are also having trouble reaching the IRS by phone this year, with the agency continuing to be understaffed due to the pandemic and budget cuts in past years.

Some have tried to blame Republican Congressional representatives for underfunding the Service, and indeed that is one reason the IRS is failing.

But in my humble opinion the primary problem is that Congress has assigned new responsibilities to the IRS that it was never designed to do, such as administer penalties and credits for the Affordable Care Act, aka Obamacare, and then to dole out stimulus payments ("refundable tax credits") resulting from pandemic legislation.

When an organization is being strained, one does not pile on additional tasks without a great deal of planning. Any experienced manager knows that you can't just throw money at the situation, you have to lay out the new requirements, figure out how they can fit in with the current systems, design and test the add-ons before widespread adoption, and then train the staff.

Of course, the COVID-19 response shut down the offices for months, just when a 24/7 work schedule was necessary to give the IRS even a chance to fulfill its new duties. Large tech companies, who have people who are accustomed to working around the clock to develop new products and services, would have had a prayer. But the IRS, or any other government agency? Not a chance.