The IRS has processed tens of millions of tax returns faster this year compared with past years while getting through to customer service on the phone is slowly improving, according to a report to Congress released Wednesday.

But there is a huge need to update the agency’s information technology services and have more workers answering calls. Still, it’s a vast improvement after years of backlogs and decades of underfunding.

The latest update on the IRS from National Taxpayer Advocate Erin M. Collins said the agency cut its backlog of unprocessed paper tax returns by 80%, from 13.3 million returns at the end of the 2022 filing season to 2.6 million at the end of the 2023 filing season. And now 35% of calls are answered, compared with 11% before.

“Overall, the difference between the 2022 filing season and the 2023 filing season was like night and day,” Collins said. “It marks a return to pre-pandemic levels.”

Through the climate, health care and tax legislation signed into law by President Joe Biden last year, the IRS received $80 billion for tax collection efforts. Agency leaders started using that money immediately to add employees to the IRS workforce, which had dwindled to 1970s levels through retirements, attrition and low pay that has not caught up with inflation.

Most recently, the agency lost some of that money after the president and Congress agreed to claw back more than $20 billion in exchange for suspension of the country’s $31.4 trillion debt ceiling.

Biden administration officials have offered assurances that the spending cuts will have minimal impact on the agency’s operations over the next few years.

Collins’ report said the IRS has tried to make do with the workers it has to achieve the Treasury Department’s goals for customer service, and that has led to other problems. For instance, now it takes an average of 15 months for the number of identity theft victim assistance cases to be closed.

That is because the IRS in the pandemic years shifted workers assigned to the identity theft segment to accounts management to answer those phone lines. With fewer workers to answer identity theft calls, the IRS is “causing harm to taxpayers who were victims of identity theft.”

There are other nontax issues caused by identity theft that may take even longer to resolve, the report said. “The pandemic undoubtedly played a big role in delays, but policy decisions have also contributed to the problem,” it said.

Earlier this year t he IRS, led by new Commissioner Daniel Werfel, released details on how it planned to use its influx of money for improved operations, pledging to invest in new technology, hire more customer service representatives and expand its ability to audit high-wealth taxpayers.

In the report, Collins’ office urged the IRS to focus its efforts on modernizing outdated technology meant to improve the taxpayer experience.

“With adequate funding, leadership prioritization, and appropriate oversight from Congress, I believe the IRS will make considerable progress in the next three to five years in helping taxpayers comply with their tax obligations as painlessly as possible,” she said.

(AP)