By Richard Rubin 

WASHINGTON -- The Internal Revenue Service cranked out $267 billion in stimulus payments in about two months, faster than many analysts expected. But challenging work lies ahead, such as opening 10 million pieces of piled-up mail and resuming a semblance of normal taxpayer service.

The agency, already struggling with budget cuts and reduced staff before the coronavirus pandemic hit in March, was given the monumental task of sending stimulus payments worth $1,200 for most adults and $500 per child to help Americans ride out the economic slump. Despite some hitches -- like payments to dead people and debit-card envelopes that looked to some like junk mail -- those payments are largely complete, the government said this week.

"The IRS has taken on nearly impossible challenges and performed many of them very well," said Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee.

Now the agency is trying to slowly reopen dozens of offices around the country and recall thousands of workers as the July 15 tax filing deadline approaches.

"It gets tougher from here," said Mark Everson, a former IRS commissioner.

Some major operations centers remain closed, and open ones aren't running at full strength. Refunds are being processed more slowly than usual, agency data indicate. Some telephone assistance is available, but IRS officials say phone lines remain unusually busy and they are directing people to the agency's website whenever possible. Catching up will take time.

"If you mailed us something, especially in February, it's gonna be a while," said Chad Hooper, an IRS worker in Philadelphia and president of the Professional Managers Association, which represents the agency's supervisors.

Meanwhile, the regular tax filing season continues, postponed from the usual April 15 deadline to July 15 as part of the coronavirus relief effort. As of May 29, the IRS had received 6.5% fewer returns than it did last year and processed 13% percent fewer. That suggests many people are waiting longer than usual for refunds. Sometimes the agency's automated filters block refunds for suspected fraud, requiring a person to check before payments are made, even on electronically filed returns that normally yield fast refunds.

Michael Whiteley, an unemployed chef in Rochester, N.H., said he filed his tax return in March, expecting a refund of more than $4,000. Instead, he got a notice from the IRS requesting documentation to prove that his son with a different last name was his own. Mr. Whiteley, who had already spent about $500 at H&R Block for tax preparation, said he spent $40 on expedited mail delivery to send follow-up documentation to the IRS in Fresno, Calif. -- an office that isn't set to reopen until the end of June.

"I'm still sitting here to this day, waiting," he said.

Getting back to normal will be tricky. More than half of agency employees have been working remotely, according to the House Ways and Means Committee. But about 30% have been on paid leave because of the pandemic, and those who staff phone lines generally can't work from home. The IRS had been trying to make more employees eligible for remote work but didn't finish doing so before the pandemic started, Mr. Hooper said.

"Having more modern systems would have been a great thing to have prepared for prior to a thing like this," said Andrew Moylan, executive vice president of the National Taxpayers Union Foundation, a nonprofit research group affiliated with a conservative organization. "Expect less timeliness, less ability to contact people, less ability to get your questions answered, more problems that people have to sort out."

Reopening will be uneven for an agency with offices scattered across the country. Major offices in Utah, Texas and Kentucky reopened this week for employees who can't work from home. Next come eight states and Puerto Rico, including campuses in Atlanta and Fresno, and that phase could bring back as many as 12,500 workers who aren't eligible to work remotely. Offices in places with tighter restrictions -- including Pennsylvania, Washington, D.C., New York and Maryland -- aren't yet scheduled to reopen.

Different campuses do different types of work. Many employees have very specialized skills handling certain types of tax returns, creating a complicated management challenge to restore full service.

"This is not a McDonald's where you can move a person from the register to the to-go window," said Mr. Everson, now vice chairman of Alliantgroup LP.

The IRS hasn't restarted services that require face-to-face meetings with the public, such as taxpayer assistance centers and some audit and collections operations. That is a safety concern for taxpayers and the government. Years of hiring freezes and the security of public-sector jobs mean the IRS has an aging workforce that is more susceptible to Covid-19.

"Employees remain anxious about the risks posed by taking public transportation, being in enclosed facilities with hundreds of co-workers and whether their work stations will be consistently and properly cleaned and disinfected," said Tony Reardon, president of the National Treasury Employees Union, which represents front-line IRS workers.

IRS Commissioner Charles Rettig, in a memo to employees, said their health and safety was the agency's priority. In a statement to The Wall Street Journal, Mr. Rettig said employees worked around the clock in challenging circumstances to provide more than 159 million payments.

"As we continue a phased-in reopening, we will do everything possible to accelerate our operations and enhance taxpayer services and processing of refunds," he said.

There are other challenges. In March, the IRS announced its "People First Initiative," suspending some enforcement and collection through July 15 to help taxpayers struggling with unemployment and disruption. At some point, the agency will shift back toward enforcement.

When will that happen?

"It's going to be a judgment call," said Diana Erbsen, a lawyer at DLA Piper in New York who is chairwoman of the agency's advisory council. "It's not going to be an on-off switch."

Write to Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

June 06, 2020 08:14 ET (12:14 GMT)