February 27, 2022 - Douglas Myser

IRS scraps plan to close plant. The Internal Revenue Service has scrapped a previous plan that it had to close a Tax Processing facility it had, over the massive backlash it has received for falling so far behind on the processing of back tax returns. The backlog threatens delays, and problems for the 2022 tax filing season, as the estimate of how many returns still have not been filed for the 2021 tax year, range from 7 to 12 million returns. The IRS had previously closed the Austin facility back in 2016 to cut costs as the agency had to deal with budget cuts from Congress. They then pushed to have tax filers, file tax returns online in an effort to cut down on costs. It did save some money, but the number of paper returns has swelled due to budget cuts, and the impact of Covid on the IRS operations, along with the aforementioned budget cuts. IRS scraps plan to close plant.

Nearly 90 percent of tax filers submit their returns online, a number the agency is trying to boost to improve the efficiency and accuracy of the agency. But that still leaves tens of millions of paper returns for the IRS to process at centers like Austin. And the agency has fallen behind. According to the IRS numbers, they have 24 million tax returns with some refunds held up for 10 months or more. Many of those returns are people who owe the IRS large suns of money. They may want to consider the IRS Fresh Start Program as an alternative.

Eight in 10 filers received refunds in 2021, IRS data shows, and a delayed refund can have profound consequences. Millions of taxpayers rely on that money for basic living expenses, and delays can have an enduring impact on households that are strapped for cash or taxpayers who build their refunds into their financial plans.