The Internal Revenue Service collected approximately $4.9 trillion in gross revenues during fiscal year 2022, generating about 96 percent of the funding that supports federal government operations. The report noted that collections remained strong even as the agency faced challenges from the COVID-19 pandemic, which continued to affect taxpayers and IRS operations during the year.
The agency’s fiscal year 2022 progress report highlights how IRS employees maintained critical tax administration functions while implementing sweeping changes enacted by Congress to help Americans affected by the pandemic. The IRS completed delivery of the third round of Economic Impact Payments, bringing the total distributed across three rounds to more than $830 billion.
“Our workforce collects approximately $4.9 trillion in gross revenues and generates about 96 percent of the funding that supports the federal government’s operations,” Acting Commissioner Doug O’Donnell stated in the report. “The hard work of our dedicated employees makes it possible for the government to perform its vital functions and be effective on everything from education to defense.”
The agency also wrapped up disbursement of advance monthly payments of the Child Tax Credit, with eligible families receiving a total of $93 billion in advance payments between July and December 2021. According to the report, these programs delivered direct payments to households during a period of economic uncertainty.
IRS Processing Delays and Service Updates
The pandemic continued to create significant challenges for the IRS during the 2022 tax filing season, particularly around processing paper tax returns and responding to phone inquiries. The agency faced an unprecedented level of phone demand while working to reduce a substantial backlog of paper correspondence and unprocessed 2021 tax returns.
To address these issues, the IRS implemented several strategies including surge teams, mandatory overtime for staff, and expanded access to online self-service tools for taxpayers. The agency also temporarily suspended various notices to help manage the workload and expedite case closures.
The IRS noted that electronic filing with direct deposit remained the fastest way to avoid processing delays and receive refunds, a message it continues to emphasize as it modernizes systems and processes.
IRS Funding Under Inflation Reduction Act
A significant development during fiscal year 2022 was the passage of the Inflation Reduction Act, which provided the IRS with nearly $80 billion in new funding over ten years. In the agency’s report, Acting Commissioner Doug O’Donnell described the additional funding as “a once-in-a-generation opportunity for the IRS to transform itself” and reshape operations.
The funding is designated for workforce expansion, technology modernization, and enhanced enforcement capabilities. The IRS enforcement revenue in fiscal year 2022 was approximately $72 billion, about 26 percent higher than in fiscal year 2019, according to agency data.
The agency established a new Taxpayer Experience Office during the fiscal year to set strategic direction for improving taxpayer service and identify opportunities for continuous improvements. This office is working to coordinate efforts that will benefit individual taxpayers, businesses, and tax professionals.
IRS Services for Diverse Communities
The IRS continued efforts to enhance service for taxpayers in diverse and under-served communities during fiscal year 2022. Building on previous work that included providing Form 1040 in Spanish for the first time in 2021, the agency completed conversion of 34 Spanish notice inserts to Braille, text, audio, and large print formats.
The agency also converted Form 1040 and its main schedules into Spanish Braille, text, and large print, along with similar conversions for Form 1040 NR, 1040 SR, W-4, and six IRS publications. The IRS stated that these accessibility improvements were intended to strengthen taxpayer service regardless of language or disability status.
For business owners and high-earning professionals, these operational updates could result in more reliable processing of complex returns and broader access to tax guidance. The improvements may also support more consistent enforcement of tax laws across different taxpayer groups.
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