During Tax Oversight Panel, Kelly Warns of Millions of Americans Waiting on Refunds, EIPs, and Employee Retention Credits

March 18, 2021 — Coronavirus Bulletin    — Opening Statements    — Oversight    — Press Releases   

Millions of Americans are still waiting for the IRS to process their 2019 tax returns, missing stimulus checks, and other program benefits because of the pandemic. Now, the Democrats’ $1.9 trillion spending package has placed an even bigger burden on the agency as we enter the 2021 tax filing season. Rep. Mike Kelly (R-PA), the top Republican on the Ways and Means Committee’s Oversight Subcommittee, expressed concern about this backlog during today’s hearing with IRS Commissioner Charles Rettig.

To watch the video, click here.

Key Takeaways:

  • “2.2 million individual and 4.4 million business returns received last year are still waiting to start processing. And millions more remain in the processing pipeline due to needed error resolutions and other issues. That means millions of taxpayers are still awaiting refunds for tax returns they may have filed as far back as March and April last year.”
  • “IRS budget was increased $400 million for fiscal year 2021. And in the last year, the IRS has received AN ADDITIONAL $3.1 billion in appropriations through the Covid relief bills and the Democrats’ partisan bill. I know every agency would like as much funding as they can get, but it is clear to me at this stage that the challenges the IRS faces right now will not be solved with more money.”
  • “One of the main goals of Taxpayer First Act was to improve IRS’s customer service. Unfortunately, I’ve heard from many constituents that the phone lines at IRS are jammed up. IRS has received more calls than ever this year, and I’d like to know more about how you plan to address the millions of unanswered calls.”

His remarks as prepared for delivery appear below:

Thank you for holding this hearing today, Mr. Chairman.

And thank you, Commissioner Rettig, for being here, and for your hard work and leadership during this unprecedented time for our country and the IRS.

I also want to thank the men and women of the IRS around the country that have worked hard during the pandemic to keep the agency running and to provide services to American taxpayers during this challenging time.

Now with that said, I think you would acknowledge that the IRS still faces several challenges this tax season, and I have concerns about how the agency plans to address them.

Let me say to start that I am most concerned about the current backlog of unprocessed tax returns from people who filed their taxes last year.

My understanding is that 2.2 million individual and 4.4 million business returns received last year are still waiting to start processing.

And millions more remain in the processing pipeline due to needed error resolutions and other issues.

That means millions of taxpayers are still awaiting refunds for tax returns they may have filed as far back as March and April last year.

Given that this backlog may not be resolved until well into this year, I am concerned about the agency’s ability to handle last year’s backlog while also having to work through another difficult filing season this year.

I understand that you have announced an extension of the filing season deadline by 30 days. I hope to hear more about your plan for how you will use those 30 days to work through the backlog and get our tax system back on a normal schedule as soon as possible.

I worry that further delays could lead to a backlog at the end of this year and turn this into a vicious cycle that we never get out of.

Whenever we have an IRS related hearing, we are always told that the IRS needs additional funds. And it is true that Congress has added to the agency’s responsibility over the last year with bipartisan Covid-relief bills, and now with the Democrats’ partisan $1.9 trillion bill that has very little to do with Covid relief.

But it is worth acknowledging where things stand with IRS funding.

The IRS budget was increased $400 million for fiscal year 2021.

And in the last year, the IRS has received AN ADDITIONAL $3.1 billion in appropriations through the Covid relief bills and the Democrats’ partisan bill.

I know every agency would like as much funding as they can get, but it is clear to me at this stage that the challenges the IRS faces right now will not be solved with more money.

Now, there are also a few other issues I’d like to discuss.  

The first is customer sevice.

One of the main goals of Taxpayer First Act was to improve IRS’s customer service. Unfortunately, I’ve heard from many constituents that the phone lines at IRS are jammed up.

IRS has received more calls than ever this year, and I’d like to know more about how you plan to address the millions of unanswered calls.

Now related to that, I also want to talk about the customer service amendment that I offered during our markup of the latest COVID package.

Last year, IRS was overwhelmed with phone calls about Economic Impact Payment issues. And while we hope some of those isues have been cleared up, we can expect that taxpayers will still have significant customer service needs at the IRS this year.

My amendment would have required IRS to establish a dedicated customer service program to receive claims of missing or incorrect payments and to conduct case work until those claims are resolved.

It may also be necessary to extend this program to 2019 refunds that taxpayers are still waiting on through no fault of their own.

This would also ease the flood of calls to our district offices about the EIP’s.

I’d note that at the markup Chairman Neal agreed to work with me on a much needed bill focused on customer service, so I would love to discuss some of your ideas to improve the customer service experience for taxpayers and IRS employees.

Lastly, I have concerns about the Employee Retention Tax Credit and whether money is actually reaching the business owners it was intended to help.

It is my understanding that millions of business owners like Mario’s Pizza in my district, filed the forms required for this credit and they are still waiting on their refunds. Some of these forms date back to April of 2020. These folks can’t wait that long and Congress didn’t intend for them to wait that long.

Again, I want to thank the Commissioner for being here today, and I thank the employees at IRS for all of their hard work during this difficult time.

With that, I yield back.