Report shows IRS had backlog of nearly 8M paper business tax returns in 2020

(CNBC/WHEC) — A backlog of nearly 8 million paper-filed business tax returns piled up at the Internal Revenue Service (IRS) in 2020 amid the pandemic.

That’s according to a report by a U.S. Treasury Department watchdog issued Tuesday.

The backlog represents a 3,230% increase relative to the end of 2019, when about 239,000 paper returns were waiting to be processed, according to the report.

It cites the actions taken by the IRS in an attempt to prevent the spread of COVID-19 in the workplace and to make accommodations for taxpayers as the reason for the delays.

Those methods include shutting Tax Processing Centers and other offices nationwide in early April and extending the federal income-tax filing deadline to July 15.

A letter written by Commissioner of the IRS Wage and Investment Division Kenneth Corbin in response to the report claims the business tax return backlog has declined significantly, to 291,000 as of July 2021.

Corbin wrote in the letter that the IRS expanded its telework operations, hired about 3,500 new employees in processing operations and transshipped more than 2.3 million returns, forms and documents between processing centers to balance inventories and prevent bottlenecks.

However, the report shows the IRS continues to have difficulty hiring enough staff to continue processing tax-year 2020 returns and only met 63% of its recruitment goal for processing operations as of July.