The 2024 Annual Report to Congress, released by National Taxpayer Advocate Erin M. Collins, highlights improvements in IRS services while acknowledging ongoing challenges. Refund processing has become faster, customer support has improved, and wait times have decreased. However, delays in processing Employee Retention Credit (ERC) claims and resolving identity theft cases remain significant concerns.
Taxpayers have seen notable progress due to funding from the Inflation Reduction Act, which helped enhance IRS services and IT infrastructure. These upgrades have improved customer support, reduced the time it takes to process correspondence, and expanded in-person assistance.
Despite these advancements, two key issues continue to affect business owners. The IRS still has a backlog of 1.2 million ERC claims, leaving many eligible businesses waiting for refunds that impact their cash flow. The agency expects to process an additional 500,000 claims in 2025, but the timeline remains uncertain. Business owners dealing with refund delays or replacement checks may continue to experience long wait times.
Identity theft resolution is another pressing issue. IRS cases involving identity theft victims currently take nearly two years to resolve, affecting hundreds of thousands of taxpayers. The report urges the IRS to prioritize these cases and work toward reducing resolution times to under 90 days.
Collins also emphasizes the need for continued funding to support taxpayer services and technology upgrades. While much of the recent funding has been directed toward enforcement, there is bipartisan support for maintaining resources dedicated to improving taxpayer services and modernizing IT systems. The report recommends that Congress ensure these services remain funded, even if enforcement budgets are adjusted.
Despite improvements, gaps in IRS service persist. Many taxpayer calls go unanswered, and identity theft filters continue to create difficulties. Business owners and individuals may still struggle to get timely assistance, particularly during peak tax season.
To help improve taxpayer experiences, the report proposes several legislative changes. These include establishing competency standards for tax preparers to prevent errors that lead to penalties, expanding the jurisdiction of U.S. Tax Court to make refund disputes more accessible, and broadening the reach of the Low Income Taxpayer Clinic program.
This year marks 25 years of the Taxpayer Advocate Service, which has assisted more than 5 million taxpayers in resolving IRS-related issues. As an independent voice within the IRS, the service plays a crucial role in protecting taxpayer rights and advocating for systemic improvements.
For business owners, staying informed about IRS developments is essential to navigating tax-related challenges more effectively. The report underscores the importance of continued efforts to create a tax system that is more efficient, accessible, and responsive to taxpayer needs.
