Taxpayers could see 1st ‘normal filing season’ in years

(NEW YORK) — You could say the Internal Revenue Service is undergoing a Renaissance. After years of criticism for being inefficient and antiquated, the IRS has spent nearly $1 billion to improve its service.

“So far, so good,” Ted Rossman, senior industry analyst at Bankrate.com, told ABC News about the current tax-filing season.

As of the end of February, the IRS had processed 1.9 million more returns and issued 5.4 million more refunds than the same time last year.

“That suggests to me that the gains are coming from faster turnarounds, not more filers,” said Rossman.

The IRS is also answering 90% of calls to its customer service line this year compared to just 13% a year ago, according to the agency. Tax pros say the IRS is on track for its first “normal” tax season in years after the COVID-19 pandemic upended the agency’s efforts to process returns and disburse refunds in an orderly and timely manner.

The IRS has spent nearly $848 million of the $80 billion granted to the agency over the next decade through the Inflation Reduction Act, according to Treasury Department data. The money is meant to give the agency the resources its needs to improve customer service and technology systems and to finally become a 21st century tax service.

Among the upgrades so far are new online tax-filing tools that include allowing filers to upload follow-up documents online, making the IRS more competitive with private-sector tax prep software. The agency also debuted a program that lets businesses file information reports for independent contractors through a secure portal on its website and it rolled out updated software that let’s taxpayers who filed amended returns receive refunds via direct deposit.

“It seems that most refunds are being delivered in a timely fashion this year. There’s still a paper backlog at the IRS. Even though it’s not nearly as bad as last year,” said Rossman.

Tax experts still recommend filing and requesting your refund electronically, if possible, to give yourself the best odds of getting your refund quickly. Barring any special exceptions, you should get your refund in two to three weeks in most cases. Sending a paper return or requesting a paper check could take much longer.

So far, the IRS has hired more than 5,000 employees to ramp up its customer service division and is looking to hire another 5,300 this year, according to agency officials.

The massive federal funding allocated to the IRS over the next 10 years is also meant to tighten tax enforcement on high-income earners and major corporations, something Republicans have argued would “supersize” the agency and lead IRS agents to harass taxpayers.

Treasury Secretary Janet Yellen has instructed the agency not to use any of the money to increase audits of taxpayers earning less than $400,000 a year and incoming IRS chief Daniel Werfel has promised to abide by that order.

Rossman said it is important for the IRS to “get this filing season right” after years of disarray and poor customer service.

“I think it’s important for consumer confidence and for avoiding additional regulatory scrutiny,” Rossman said. “The IRS has a monopoly on America’s taxes – it’s not like we can choose to do business with one of their competitors instead – but I still think it’s important for the IRS to start turning its reputation around.”