Every year the IRS releases a detailed financial report for its operations during the most recent fiscal year. The most recent report details the agency’s actions in fiscal year (FY) 2022. Optima Tax Relief breaks down the report.
FY 2022 brought in over $4.9 trillion in gross tax revenue, which is a major source of revenue for the federal government. About 260 million federal tax returns and forms were processed despite some labor shortages during the year. The IRS was also able to collect $72.4 billion through enforcement. On the taxpayer side, the average individual refund in 2022 was $1,838.
The IRS developed a strategic plan for FY 2022-2026 that focuses on four main goals that they hope will help meet the changing needs of American taxpayers and tax professionals. The goals are to:
- Provide quality service to taxpayers that is easily accessible
- Enforce the tax law fairly in order to encourage more voluntary compliance and narrow the tax gap
- Create a diverse and inclusive IRS staff, as well as strengthen relationships with IRS partners
- Transform operations to be more responsive to improve the taxpayer experience
The report also addressed the backlog of unprocessed tax returns that has been a major concern since the COVID-19 pandemic. As of August 12, 2022, the IRS processed all individual paper tax returns received in calendar year 2021, but still had about 135,000 left to process. There were still nearly 14.5 million unprocessed paper returns of all kinds that were received in 2022.
Finally, the report addresses the challenges that the IRS is facing in FY 2023. The first is to improve taxpayer service and experience. In FY 2022, there were several new tax laws that emerged from the pandemic that caused a large backlog of returns. In response, the agency improved their technology and used their staff more efficiently. They will continue with these actions in FY 2023. Another challenge is protecting taxpayer data and their own resources, as well as modernizing IRS operations as a whole. The IRS will focus on reducing tax fraud, increasing domestic and international compliance and enforcement, and administer tax law changes.
