Average Tax Refund up 15% YoY While Problems at IRS Persist

There is good news and bad news about income tax filing season. The good news is that the average refund through the first month of income tax season is 15% higher than the average refund through the same period a year ago. The bad news is that problems at the agency with respect to staffing levels, processing a backlog of paper returns, and having enough staplers is making a bad situation at the Internal Revenue Service even worse.

Through February 25, the IRS had processed 43.8 million out of the 45.4 million returns that had been filed. The number of returns filed through February 25 was more than 4 million more than were filed during the same period last year, according to data released by the agency. The average refund so far was for $3,473, up from $3,021 last year. In total, the IRS had refunded more than $103 billion, up from $85 billion a year ago. The IRS expects to process 160 million tax returns this year for 2021. About 90% of them will be filed electronically.

At the same time, a published report detailed the politicking between Democrats and Republicans that is keeping the IRS from modernizing its operations, hiring the staff it needs, and failing to allow itself to fulfill its role as “an organ of social welfare.”

The IRS is in the middle of trying to hire 10,000 new employees, but “meager salaries and stressful working conditions can make it hard to attract talent, particularly when private-sector companies such as Amazon can offer more money,” according to the report. The IRS has maintained the same staffing levels — about 75,000 employees — since 1970. And it’s budget has declined 20% in the last decade, when accounting for inflation.

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