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Wall Street is souring on plant-based stocks, but industry experts say that a shakeout is coming after optimism soared too high.
Shares of Beyond Meat and Oatly have shed more than half their value this year.
Competition and pandemic-related challenges have weighed on both companies’ financial results.

In this photo illustration Oatly oat milk is shown on May 20, 2021 in Chicago, Illinois.
Scott Olson | Getty Images

Wall Street appears to be souring on plant-based substitutes.
Shares of Beyond Meat and Oatly have shed more than half their value this year. The stocks are both high-profile and relative recent entrants to public markets, prone to big jumps and sharp declines in value, volatility that’s only been exacerbated by broader market swings and pressure from short sellers.

Beyond Meat trades 87% below its all-time high, and Oatly, which will mark its first anniversary as a public company on Friday, trades more than 80% below its debut price.
Industry experts say the declines may mark an inevitable shakeout as investor optimism meets reality.
After years of climbing sales, consumer interest in meat alternatives is waning. Retail sales of plant-based meat were roughly flat in the 52 weeks ended April 30 compared with the year-ago period, according to Nielsen data. Total volume of meat substitutes has fallen 5.8% over the last 52 weeks, market research firm IRI found.
“We’ve seen this in many categories in the past that take off. They have a shakeout period,” Kellogg CEO Steve Cahillane said in early May on the company’s earnings call.
Kellogg owns Morningstar Farms, a legacy player in the plant-based category with 47 years in grocery stores. Morningstar is the top seller of meat alternatives, with 27% of dollar share according to IRI data. Beyond trails in second place with 20% of dollar share, and Impossible Foods follows in third with 12%.

“The race for scale, the race for market share, the race for sales growth and consumer retention over time is going to happen,” Chris DuBois, senior vice president of IRI’s protein practice, said on a panel presented by Food Business News on Thursday.

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Downward spiral

The early days of the pandemic drove soaring demand for plant-based substitutes as consumers cooking at home looked for new options. Many tried plant-based beef, chicken or sausage for the first time and kept buying it, even if they weren’t vegetarian or vegan. The category’s sales were already growing quickly before the crisis, but they accelerated at an even faster clip.
Companies and investors alike bet that consumers would keep eating meat alternatives and drinking milk substitutes, such as Oatly’s oat-based beverage, even as Covid fears eased and lockdowns lifted.
“If you look at about a year ago, there was a tremendous amount of effervescence and enthusiasm around plant-based, to the point that it attracted a lot of speculative dollars and investments. We saw the multiples and the valuations get very enthusiastic — that’s the politest way to say it,” said Michael Aucoin, CEO of Eat & Beyond Global, which invests in plant-based protein companies.
Oatly, for example, debuted on the U.S. public markets in May 2021 with an opening price of $22.12 a share, giving the company a valuation of $13.1 billion, despite being unprofitable. As of Friday’s close, shares of Oatly were trading for $3.71 per share, knocking its market cap down to about $2.2 billion.   

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Beyond’s stock has had an even more dramatic ride. It debuted on the public markets in May 2019 at $46 per share and soared in the months after, hitting an all-time high of $234.90 on July 26 of that year, which gave it a market value of $13.4 billion. The stock closed Friday at $31.24 per share, with a market value of under $2 billion.
Investors’ enthusiasm made it relatively easy for plant-based companies to raise money in recent years, through either the public or private markets, Aucoin said. In 2021, the plant-based protein category saw $1.9 billion in invested capital, which represented nearly a third of dollars invested into the category since 2010, according to trade group Good Food Institute.
The companies then plowed much of those funds into marketing to push consumers into trying their plant-based products. The arena was also growing increasingly crowded as traditional food companies and new start-ups began chasing the same growth. Tyson Foods, a one-time investor in Beyond, launched its own plant-based line. So did fellow meat processing giants JBS and Cargill.
“You also saw irrational exuberance in the category and the entrance of many, many new players, which took a lot of shelf space, took a lot of trial, not always the highest-quality offerings, to be honest with you,” Cahillane told analysts on Kellogg’s earnings call.

Flatlining sales

The turning point came in November when Maple Leaf Foods sounded the alarm that growth of its plant-based products was slowing, according to Aucoin. The Canadian company bought plant-based brands Field Roast, Chao and Lightlife in 2017 as an entry point into the fast-growing category.
“In the past six months, unexpectedly, there has been a rapid deceleration in the category growth rates of plant-based protein. Of course, our performance has suffered in the middle of this. But the more concerning set of facts are rooted in category performance, which is basically flatlined,” Maple Leaf CEO Michael McCain told investors on the company’s third-quarter earnings call in November
Company executives said that Maple Leaf would review its plant-based portfolio and its strategy.
Less than a week after Maple Leaf’s warning, Beyond Meat disappointed investors with its own lackluster results, even after warning about weaker sales a month earlier. Beyond chalked it up to a range of factors, such as the surging delta variant of the Covid virus and distribution problems, but its business hasn’t recovered yet.
Beyond’s first-quarter results, released on Wednesday, marked the third consecutive reporting period that the company posted wider-than-expected losses and disappointing revenue.

Beyond Meat CEO Ethan Brown told analysts on Wednesday’s call that the company’s weak performance stemmed from four factors: softness in the overall plant-based category, a consumer shift from refrigerated meat alternatives to frozen ones, higher discounts and increased competition.
Competition has likewise put pressure on Oatly. The U.S. oat milk category keeps growing, but Oatly is losing market share as players with more scale release their own versions. Dairy company HP Hood’s Planet Oat recently overtook Oatly as the top oat milk maker in the U.S.

Opportunities ahead

The slowdown isn’t hitting every plant-based manufacturer. Impossible Foods said in March its fourth-quarter retail revenue soared 85%, boosted by its expansion into new grocery stores. The company is privately owned, so it doesn’t have to disclose its financial results publicly.
But the upheaval has weighed on Impossible in other ways. Reuters reported in April 2021 that Impossible was in talks to go public, aiming for a valuation of $10 billion, about $1.5 billion higher than Beyond’s market value at the time. But the company never filed a prospectus, instead raising $500 million from private investors in November at an undisclosed valuation.  
Josh Tetrick, CEO of JUST Egg, which accounts for about 95% of U.S. egg substitute sales, told CNBC he sees plenty of growth ahead.
Sales of egg substitutes are roughly flat over the 52 weeks ended April 30, according to Nielsen data, but Tetrick sees opportunity to boost consumer awareness and the number of restaurants with its egg substitute on their menus.
Aucoin is confident consumer interest in plant-based alternatives will grow and eventually bring back investor optimism in the category, although not to the same extent as its heyday.
“There will be a shakeout as the money isn’t as easily available, but I do think that we’ll see some true winners and strong companies emerge,” Aucoin said.
The industry could see brand consolidation soon as the meat alternatives category closes in on $1.4 billion in annual sales, RI’s DuBois said. Together, Morningstar Farms, Beyond and Impossible account for nearly 60% of the dollars spent on meat substitutes.
“I think over the next year of so, you’re going to see the real leaders or so emerge,” DuBois said.

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Dubai’s Emirates Airline posted a loss of $1.1 billion in the year through March, up from a $5.5 billion loss the previous year.
The airline has resumed flights to 140 destinations, but the surge in fuel prices continues to challenge the pandemic-battered aviation sector.
Emirates said fuel accounted for 23% of operating costs over the year, compared to just 14% in 2020-21.

Aircraft operated by Emirates, at Dubai International Airport in the United Arab Emirates.
Christopher Pike | Bloomberg | Getty Images

Dubai’s Emirates Airline narrowed its losses to $1.1 billion in the year to March, even as soaring jet fuel costs threaten to overshadow a recovery in travel demand. 
The world’s largest long haul carrier said revenue jumped 91% to $16.1 billion dollars, as travel lockdowns eased and the airline added capacity. Emirates posted a $5.5 billion loss in the previous year. 

“2021-22 was largely about recovery, after the toughest year in our Group’s history,” Emirates Group Chairman and Chief Executive Sheikh Ahmed bin Saeed Al Maktoum said in a statement on Friday.  
“We expect the Group to return to profitability in 2022-23, and are working hard to hit our targets, while keeping a close watch on headwinds such as high fuel prices, inflation, new COVID-19 variants, and political and economic uncertainty.”

The airline had resumed flights to 140 destinations by the end of March, but the surge in fuel prices — up more than 50% so far this year — continues to challenge the pandemic-battered aviation sector. Emirates said its fuel bill more than doubled to $3.8 billion dollars as the price of oil and jet fuel soared in recent quarters.
“It’s very difficult to establish where that price will stop, or how far it might go down,” Sheikh Ahmed told CNBC in an interview on Tuesday when asked about the price of fuel. “That’s really affecting the airline business in a big way,” he added, saying geopolitics and Russia’s invasion of Ukraine was having a significant impact on fuel prices. 

Emirates said fuel accounted for 23% of operating costs over the year, compared to just 14% in 2020-21.
“The relatively recent reopening of important markets in Asia is key to Emirates’ recovery,” Alex Macheras, an independent aviation analyst, told CNBC. “Challenges will remain with China’s lockdowns continuing, fleet concerns amid Boeing 777 delays, and a cost-of-living-crisis globally that will be more visible [in terms of impacts] to airlines this winter.”

Path to IPO

Emirates Group, which includes Emirates and its air service business Dnata, recorded an annual loss of $1 billion dollars, despite Dnata returning to profitability. Group revenue increased by 86% to $18.1 billion, and the group ended the year with a 30% improvement in its cash balance to $7 billion dollars.
Sheikh Ahmed told CNBC the group now plans to pay the Dubai government back some of the nearly-$4 billion in emergency relief that it pumped into the airline at the height of the pandemic. 
“That was money well spent,” he said. “If things continue as they are now … we can pay back what the Government has injected into the company.”
It comes amid renewed speculation that Emirates or its subsidiaries could be tapped by the Dubai government to go public, joining a list of businesses already earmarked for initial public offering as part of a push among governments in the region to take their state enterprises public.
“I’m sure that maybe sometime in the future that Emirates will be on the market and people will be able to buy the shares,” Sheikh Ahmed said. “I don’t call that point,” he added, stopping short of offering any further plans.
Dubai Airports, the Emirates home base, attracted 13.6 million passengers in the first quarter, according to new data released on Thursday. Dubai Airports CEO Paul Griffiths told CNBC that air passenger traffic in Dubai may reach pre-pandemic levels in 2024, a year earlier than previously expected, providing a tailwind for Emirates through the recovery. 

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Monday – Friday, 6:00 – 7:00 PM ET

It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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Tellurian Inc: “For younger people out there, listen to me. I want you to spend five bucks and buy this.”

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Block Inc: “They did a very good job [in their latest quarter].”

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Prologis Inc: “These guys are the right price, you’ve got to buy.”

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Monday – Friday, 6:00 – 7:00 PM ET

Zebra Technologies chief executive Anders Gustafsson told CNBC’s Jim Cramer on Friday that while the company has seen freight costs come down, shortages of components like semiconductor chips continue to cause issues.
“Over the past two years, we’ve seen kind of a migration of some of the issues. Now, it started off with freight being the issue that we talked about, the cost that we incurred, that has moderated,” the CEO said.

Zebra Technologies chief executive Anders Gustafsson told CNBC’s Jim Cramer on Friday that while the company has seen freight costs come down, shortages of components like semiconductor chips continue to cause issues.
“Over the past two years, we’ve seen kind of a migration of some of the issues. Now, it started off with freight being the issue that we talked about, the cost that we incurred, that has moderated. It was somewhat better in Q1 than it was in Q4 – our cost per kilo was coming down, not to what it was pre-pandemic but it certainly was down,” Gustafsson said in an interview on “Mad Money.”

He added that the company is forecasting a hold at these levels for the rest of the year.
Yet, “component shortages, semiconductor shortages, and we’re now spending a lot more money on securing long-lead time parts and having to expedite them to our facilities and then expediting the finished goods to our customers,” the CEO said.
And while the company has had to pay for more expensive shipping options as a result of the supply chain delays, it expects to see improvement later in the year, according to Gustafsson.
“We are putting everything basically on air freight versus putting it in a container on ocean [freight], which obviously would be much cheaper, but as we go through the year, we expect that we will get better supply and we will be able to put more things on ocean,” he said. 
Shares of Zebra rose 6.36% on Friday.

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Monday – Friday, 6:00 – 7:00 PM ET

CNBC’s Jim Cramer said Friday that he’s breathing a sigh of relief as beaten-down stocks ‘have already taken enough hits,’ allowing investors to trade in a safer environment next week –  though they still need to tread carefully.
“Many stocks have finally come down to the point where it’s safe to be constructive, as long as you stay away from the most toxic areas, so I’m breathing a sigh of relief here,” the “Mad Money” host said.

CNBC’s Jim Cramer said Friday that he’s breathing a sigh of relief as beaten-down stocks ‘have already taken enough hits,’ allowing investors to trade in a safer environment next week –  though they still need to tread carefully.
“When we’ve been beaten down to these levels, we reach a point where stocks that would normally be clubbed have already taken enough hits, and that alone has allowed them to have at least a short covering rebound, which is what today might have been,” the “Mad Money” host said.

“Many stocks have finally come down to the point where it’s safe to be constructive, as long as you stay away from the most toxic areas, so I’m breathing a sigh of relief here,” he added.
Stocks rose on Friday to conclude a volatile week of trading, with the Dow Jones Industrial Average gaining 1.47% while the S&P 500 increased 2.39%. The Nasdaq Composite climbed 3.82%.
Cramer noted he is watching for St. Louis Federal Reserve President James Bullard’s comments on inflation next week.
“He’s a hawk’s hawk — he’s also my kind of hawk. Bullard knows it is only going to get harder to break the cycle of inflation if the Fed doesn’t act decisively right now,” Cramer said.
He also previewed next week’s slate of earnings. All earnings and revenue estimates are courtesy of FactSet.

Monday: Weber, Warby Parker
Weber

Q2 2022 earnings release before the bell; conference call at 8:30 a.m. ET
Projected EPS: 18 cents
Projected revenue: $659 million

Warby Parker 

Q1 2022 earnings release before the bell; conference call at 8 a.m. ET
Projected EPS: $0
Projected revenue: $154 million

Cramer said that both Weber’s and Warby Parker’s earnings will reveal the market’s sentiment toward companies that recently went public.
Tuesday: Home Depot, Walmart
Home Depot

Q1 2022 earnings release at 6 a.m. ET; conference call at 9 a.m. ET
Projected EPS: $3.69
Projected revenue: $36.7 billion

Walmart

Q1 2023 earnings release at 7 a.m. ET; conference call at 8 a.m. ET
Projected EPS: $1.48
Projected revenue: $138.84 billion

Wednesday: Lowe’s, Target, Cisco
Lowe’s 

Q1 2022 earnings release at 6 a.m. ET; conference call at 9 a.m. ET
Projected EPS: $3.22
Projected revenue: $23.77 billion

Target 

Q1 2022 earnings release before the bell; conference call at 8 a.m. ET
Projected EPS: $3.07
Projected revenue: $24.46 billion

“[The market’s] so beat up that all of them might work here. I see these retail stocks as barometers of the consumer,” Cramer said of Home Depot, Walmart, Lowe’s and Target.
Cisco

Q3 2022 earnings release at 4:05 p.m. ET; conference call at 4:30 p.m. ET
Projected EPS: 86 cents
Projected revenue: $13.34 billion

“In order for this one to work, the company needs to speed up its shift from hardware to software, or else the stock is going to get clobbered,” Cramer said.
Thursday: Kohl’s, Palo Alto Networks
Kohl’s 

Q1 2022 earnings release at 7 a.m. ET; conference call at 9 a.m. ET
Projected EPS: 71 cents
Projected revenue: $3.68 billion

“I think this could be a three-down, ten-up situation because the stock’s fallen so far from its highs,” Cramer said. “I like those odds.”
Palo Alto Networks 

Q3 2022 earnings release after the close; conference call at 4:30 p.m. ET
Projected EPS: $1.68
Projected revenue: $1.36 billion

Cramer said he thinks the company could be “the single best story of the week.”
Friday: Deere

Q2 2022 earnings release before the bell; conference call at 10 a.m. ET
Projected EPS: $6.69
Projected revenue: $13.23 billion

Deere stock “tends to react poorly to the headlines and then rebound at the end of the conference call,” Cramer noted. “Patience is a virtue.”
Disclosure: Cramer’s Charitable Trust owns shares of Cisco and Walmart.

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Monday – Friday, 6:00 – 7:00 PM ET

Affirm Holdings CEO Max Levchin told CNBC’s Jim Cramer on Thursday that despite the market’s poor performance this year, the U.S. consumer – and Affirm customer – are spending healthily.
“The U.S. consumer is alive and well. They’re shopping, they’re buying, they’re paying their loans, at least to Affirm quite well,” the “Mad Money” host said.
Affirm stock gained 33.8% in the pre-market on Friday but is still well below its 52-week high of $176.65, cooling off by mid-morning and hovering around $21.

Affirm Holdings Chairman and CEO Max Levchin told CNBC that despite the market’s poor performance this year, U.S. consumers – and Affirm’s customers – are spending healthily.
“The U.S. consumer is alive and well. They’re shopping, they’re buying, they’re paying their loans, at least to Affirm quite well. Generally speaking, things are going according to plan, the upheaval in stock markets does not seem to have an actual impact on our underlying business which is performing really, really well,” Levchin said in an interview on Thursday evening on “Mad Money.”

Shares of Affirm rose more than 20% to around $22.50 on Friday, the day after the buy-now, pay-later lender’s latest quarterly earnings report, which saw a smaller-than-expected loss. Affirm also beat top-line estimates and said it’s extending its partnership with Shopify.
“We’ve been the partner of choice, if you will, to all these really, really great companies that fuel the American e-commerce and we’ve done well there. That’s where all our growth comes from, that said, we also have a fantastically-well growing program … a merchant self-service,” Levchin said, noting that Affirm also has partnerships with Walmart and Amazon.
Affirm opened Friday near $25 per share. But that’s still down 85% since its all-time high of $176.65 back in November.
Affirm has not released its full fiscal year 2023 outlook or full-year guidance yet. It plans to deliver those numbers in the company’s next earnings report.
Still, Levchin, Affirm’s founder, appeared to be bullish about the company’s growth prospects.

“Some of our competitors have just recently posted their 15% annual growth rates, some of them are not public so I don’t really know. You can see from my numbers that we’re doing just fine and doing so with really, really high quality revenue, really good unit economics,” he said. “Everyone should be switching to buy now, pay later.”

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An over-the-top modern mansion in Bel Air was listed for $87.8 million for an auction. But the highest bid came in just under $45.8 million, according to the seller Alex Khadavi.
Khadavi — who owes tens of millions of dollars to several creditors, according to court filings — had hoped the auction would precipitate a sale price large enough to cover his debt.
If the sale get’s court approval, the mansion would be the fourth most expensive home to ever sell at auction.

Marc & Tiffany Angeles

An over-the-top modern mansion in Bel Air was listed for $87.8 million for an auction this week. But the highest bid came in just under $45.8 million, according to the home’s seller, dermatologist-turned-developer Alex Khadavi.
“Horrible, Horrible, Horrible!” was how Khadavi characterized the auction results to CNBC. He filed for Chapter 11 bankruptcy protection two weeks after putting the home on the market last year.

Despite flashy amenities such as a stealth DJ booth that rises out of the living room floor by hydraulics, a black marble-clad car gallery and a glass and marble bridge suspended above the foyer, the auction for the property in the luxury Los Angeles neighborhood failed to meet the $50 million reserve, the lowest amount Khadavi would entertain.
“Nobody told me this thing’s going to go below, below this level,” he said.

Dr Khadavi seated on top of the DJ booth that rises from beneath the floor at his spec house in Bel Air.
Joe Bryant

Khadavi — who owes tens of millions of dollars to several creditors, according to court filings — had hoped the auction would precipitate a sale price large enough to cover his debt. But the doctor told CNBC he wasn’t happy that the auction, which concluded Monday evening, coincided with large drops in both equities and crypto.
Khadavi also said he believed his deal with the auctioneer, Concierge Auctions, precluded the company from starting the bidding under the reserve price. So when the five-day auction opened, he was shocked to see the auction house start bidding $10 million below the lowest price he’d agreed to consider. The seller believes that lower-than-expected starting point set the stage for what happened next.
The bids came in slow and on the last day of the auction the highest bid was accepted, and it fell about $4.2 million short of the reserve. The last offer of $46.8 million before the auction closed wasn’t achieved.

A screen grab of the auction results from Khadavi’s mobile phone.
Alex Khadavi

Concierge Auctions had no comment on Khadavi’s confusion over why bids started below his reserve. The auctioneer would not reveal how many bidders actually bid in the auction. But the company’s president, Chad Roffers, offered this statement via email:
“After a spirited auction, the bidding is closed and the high bid is in the hands of the Trustee. With over 80 qualified showings in the last 60 days, we are confident market value was delivered.” 

A glass-and-marble bridge overlooks the living room and leads to the owner’s wing.
Marc & Tiffany Angeles / Aaron Kirman Group

Typically, a seller is not required to accept a bid below the reserve price, but the auction of Khadavi’s property, located at 777 Sarbonne Road, is a bit more complicated because it’s part of bankruptcy proceedings. Khadavi told CNBC that in early June the highest existing offer on the home will be considered by the court and if it’s approved the sale will move forward whether he likes it or not.
Khadavi is now in a race to find an offer that exceeds the top bid delivered in the auction and he said he’s considering legal action against the auctioneer for what he called a “flawed” auction.
“Honestly, I’m not happy,” co-listing agent Aaron Kirman of Compass said. “We wanted more.”
But Kirman said he doesn’t believe the auction was flawed. “At the end of the day, the highest bidder is the highest bidder,” said the agent, who’s been involved with several luxury real estate auctions.

An almost 50% price cut is not unusual for high-end properties that sit on the market for a prolonged period of time before finally going to auction. Based on CNBC’s review of recent ultra-luxury auctions, the top four mansions to ever sell at auction saw their original asking prices chopped by 68% or more.  
The Bel Air deal will include a court-approved 5% auction fee, which will be paid by the buyer, according to the auctioneer’s website. That would bring the property’s current offer to just over $48 million. If the sale get’s court approval, the mansion would be the fourth most expensive home to ever sell at auction.

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A leading House Democrat demanded President Joe Biden replace IRS Commissioner Charles Rettig over the agency’s controversial destruction of data related to 30 million paper-filed tax returns.
“The IRS is vital to public confidence in our nation and its Trump-appointed leader has failed,” said Rep. Bill Pascrell, chair of the House Ways and Means Committee’s oversight subcommittee.
Tax preparers have told CNBC they fear the destruction of the documents could leave the IRS unable to verify details on a taxpayer’s returns, which in turn can lead to refunds being delayed.

Charles P. Rettig, commissioner of the Internal Revenue Service, testifies during the Senate Finance Committee hearing titled The IRS Fiscal Year 2022 Budget, in Dirksen Senate Office Building in Washington, D.C., June 8, 2021.
Tom Williams | Pool | Reuters

A leading House Democrat on Friday called on President Joe Biden to replace IRS Commissioner Charles Rettig over the agency’s controversial destruction of data related to 30 million paper-filed tax returns.
“The IRS is vital to public confidence in our nation and its Trump-appointed leader has failed,” said Rep. Bill Pascrell of New Jersey, chair of the oversight subcommittee of the powerful House Ways and Means Committee.

“This latest revelation adds to the public’s plummeting confidence in our unfair two-tier tax system,” Pascrell said.
“That confidence cannot recover if all the American people see at the IRS is incompetence and catastrophe,” the Democrat added. “The manner by which we are learning about the destruction of unprocessed paperwork is just the latest example of the lackadaisical attitude from Mr. Rettig.”
The White House did not immediately respond to requests for comment about Pascrell’s statement. An IRS spokesman had no immediate comment.
The call for Rettig’s ouster came after the Treasury Department’s inspector general for tax administration released the findings of an audit, which have angered tax preparers.
The audit revealed that the IRS has continued “to have a significant backlog of paper-filed individual and business tax returns that remain unprocessed” since the agency reopened tax processing centers in June 2020, months after the Covid-19 pandemic led to their shuttering.

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That inability to process backlogs of paper-filed returns “contributed to management’s decision to destroy an estimated 30 million paper-filed information return documents in March 2021,” the audit found.
Those documents can include W-2 forms and other information sent by employers and financial institutions to the IRS.
Tax preparers have told CNBC they fear the destruction of the documents could leave the IRS unable to verify details on a taxpayer’s returns, which in turn can lead to refunds being delayed.
“I was horrified when I read the report describing the destruction of paper-filed information returns,” said Phyllis Jo Kubey, president of the New York State Society of Enrolled Agents.
The IRS on Thursday night said that “99% of the information returns we used were matched to corresponding tax returns and processed,” while “the remaining 1% of those documents were destroyed due to a software limitation and to make room for new documents relevant to the pending 2021 filing season.”
“There were no negative taxpayer consequences as a result of this action,” the IRS said. “Taxpayers or payers have not been and will not be subject to penalties resulting from this action,” the agency said.
That explanation was not good enough for Pascrell, who said that Ways and Means Committee members and other members of Congress “have shown immense patience with the IRS.”
“The career IRS staff have performed admirably while under immense pressure, strained resources and nearly impossible circumstances during this pandemic,” Pascrell said. “Republican sabotage of this agency over the past decade have exacerbated these challenges. In our hearings, I have shown repeated deference to the work to reform the IRS but enough is enough.”
He continued later in the statement: “This latest revelation adds to the public’s plummeting confidence in our unfair two-tier tax system. That confidence cannot recover if all the American people see at the IRS is incompetence and catastrophe.”
“Mr. Rettig has had plenty of time and plenty of cooperation to begin the crucial work of fixing the IRS. There needs to be real accountability. President Biden must replace Mr. Rettig immediately and also nominate a Chief Counsel for IRS.”
— CNBC’s Kate Dore contributed to this report.

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