TIGTA Report Findings: How the IRS Fared During the Pandemic?

September 24, 2021

TIGTA Report Findings How Did the IRS Fare During the Pandemic _ JPS CPA

On September 2, 2021, the Treasury Inspector General for Tax Administration (TIGTA) issued report findings on how the IRS fared during the pandemic, specifically with its business tax return processing centers.

Due to COVID-19, the IRS closed all Tax Processing Centers on April 6, 2020, and 3 days later the Treasury responded by extending multiple filing and payment deadlines. This unprecedented act by the IRS to close its processing centers created mounting amounts of untouched tax-related work. TIGTA’s report was initiated to review the IRS’s handling of the backlog of unprocessed work, which affected many business taxpayers.

Here are a few highlights of TIGTA’s findings:

      • Tax Processing Center closures created “a significant backlog of business tax returns, correspondence, and other types of business taxpayer-related work that needed to be processed”.

      • There were 7.9 million paper-filled business tax returns unprocessed the week of December 31, 2020, compared to 239,285 at the same point in 2019.

      • Due to the IRS’s national re-opening of Tax Processing Centers in June 2020, many payments received were over 30 days old. The IRS believed that their processing system could only process payments received within the prior 30 days. After becoming aware that the payment processing program could be adjusted to accommodate older payments, on October 1, 2020, the IRS took corrective action to limit the assessment of penalties and interest.

      • Due to a 6-month lag by the IRS’s information technology division to update its programming, erroneous tax penalties were assessed for business taxpayers with tax years ending between April 2020 and December 2020 and that were filed before January 2021.

      • In Fiscal Year 2020, 6.9 million paper payments totaling over $37.6 billion were processed at IRS Tax Processing Centers. Increased usage of lockbox sites could reduce unprocessed backlog.

TIGTA’s report confirms the experience many taxpayers, accountants and attorneys encountered dealing with the IRS during the pandemic. It has been challenging to communicate due to extreme delays and erroneous information. While some identified issues have already been resolved, TIGTA has made recommendations that the IRS is now considering and working through.

To read other JPS COVID-related articles, click here.

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