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IRS had a backlog of nearly 8 million paper business tax returns in 2020 due to pandemic

  • The Covid pandemic caused a backlog of almost 8 million paper-filed business tax returns at the end of 2020, according to the Treasury Inspector General for Tax Administration.
  • That's a 3,230% increase relative to the same time in 2019, the watchdog said.
  • The IRS had reduced that backlog to 291,000 by July 2021, according to an IRS official.

Zach Gibson | Getty Images News | Getty Images

The Covid-19 pandemic caused a backlog of nearly 8 million paper-filed business tax returns at the IRS in 2020, according to a report issued Tuesday by a U.S. Treasury Department watchdog.

That represents a 3,230% increase relative to the end of 2019, when the IRS had about 239,000 paper returns waiting to be processed, according to the report, published by the Treasury Inspector General for Tax Administration.

The delays are largely a result of "unprecedented and drastic actions" the IRS took to protect employees and taxpayers during the Covid-19 pandemic, the report said.

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Those measures included shutting Tax Processing Centers and other offices nationwide in early April and extending the federal income-tax filing deadline to July 15.

Backlogs primarily affected employment tax returns, nearly 5.5 million of which were awaiting processing at the end of 2020, according to the watchdog report. Delays also affected business tax returns for partnerships, corporations, estates and gifts, fiduciaries and tax-exempt organizations, for example.

The business tax return backlog has declined significantly, to 291,000 as of July 2021, according to a letter written by Kenneth Corbin, commissioner of the IRS wage and investment division, in response to the report.

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