Watchdog sees 'light at the end of the tunnel' for the IRS

WASHINGTON (AP) — The IRS is beginning to see “a light at the end of the tunnel” of its customer service struggles, thanks to tens of billions of new money from the Democrats' climate and health law and the authority to hire more people, according to an independent watchdog within the agency.

But that upbeat assessment from the National Taxpayer Advocate is tempered by an early move by the new House Republican majority to rescind nearly $71 billion that Congress had provided the IRS, even though the bill approved Monday is unlikely to advance in the Democratic-run Senate.

In the report Wednesday to Congress from Erin M. Collins, who leads the office assigned to protect taxpayers’ rights under the Taxpayer Bill of Rights, cited “more misery” for taxpayers last year and spoke of the challenges still ahead. “I am just not sure how much further we need to travel before we see sunlight,” she said.

The report outlines how the 2022 tax filing season was a continuation of the yearslong struggle to process paper and electronic tax forms, answer taxpayer phone calls and distribute tax refunds in a timely manner.

The IRS was more successful in chipping away at its mountain of unprocessed returns. The agency began 2022 with a backlog of 4.7 million individual returns and 3.6 million amended returns. By mid-December 2022, the tax collector reduced that backlog to 1 million individual returns and 1.5 million amended returns.

“Taxpayers and tax professionals experienced more misery in 2022," the report said. “The good news is that since the close of the 2022 filing season, the IRS has made considerable progress in reducing the volume of unprocessed returns and correspondence.”

One reason for the optimism is the infusion of billions from the Democratic-powered legislation signed...