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IRS Backlog Mess

by | Apr 22, 2022 | Firm News

Great Article about IRS Backlog!

I am posting this great article from Thomson-Reuters. Tax Lawyers and CPA’s have been pushing to get the IRS to OPEN THE MAIL, process returns and correspondence. It is not uncommon for the IRS to take up to a year to respond to letters and appeals requests. Telephone calls usually have impossibly long “on hold” times and frequently the message will be the IRS is “too busy” and to “call back later.”

This is ridiculous!

Ron cappuccio

Lawyers, CPAs Again Urge IRS to Boost Taxpayer Service Amid Backlog

ABA Tax Section Letter: Proposals for Improvements in Taxpayer Service (4/5/2022)

AICPA E-mail Press Release: Another Tax Filing Deadline Down, But Problems with IRS Services Persist (4/20/2022)

By Joseph Boris

Groups representing tax lawyers and accountants have repeated calls for the IRS to act immediately to improve customer service, including suspension of automated notices, even as the agency struggles beyond Tax Day to process a huge backlog of returns.

The IRS should discontinue automated compliance actions until it’s “prepared to devote the necessary resources for a timely resolution,” the American Institute of Certified Public Accountants (AICPA) said in a statement April 20. The recommendation was one of four that a coalition of stakeholders including AICPA has made publicly and to the IRS. The others are:

  • Align requests for account holds with the time it takes the IRS to process any penalty abatement requests
  • Offer a reasonable cause penalty waiver, similar to the procedures of a first-time-abate administrative waiver
  • Provide taxpayers with targeted relief from the underpayment and late-payment penalty for the 2020 and 2021 tax years.

While the 2022 individual tax filing deadline has passed, taxpayer issues with the IRS remain “present and very real for the millions and millions that still need to file,” AICPA’s statement read.

It cited news reports that an estimated 13.6 million taxpayers filed for extensions in 2021, with the IRS estimating that 15.2 million would file for an extension this year. As of late March, the National Taxpayer Advocate reported there were still 15 million unprocessed returns—”a number that some think is too low to reflect the actual IRS backlog,” the accounting group noted.

“It’s unlikely that, with the measures the IRS has already announced, these issues will be resolved by the October deadline – possibly even by next tax filing season,” Melanie Lauridsen, AICPA’s senior manager for tax policy and advocacy, said in the statement. She added that the IRS still as an opportunity “to make things easier for and provide relief to millions of taxpayers—we encourage them to do that.”

AICPA noted that at the start of the 2022 tax season, the group and others representing tax practitioners, businesses, and taxpayers formed Tax Professionals United for Taxpayer Relief Coalition and presented recommendations to the IRS. These were aimed at easing the burden on taxpayers and practitioners by reducing unnecessary contact with the agency. See Suspension of ‘Some’ Automatic IRS Notices Not Enough, AICPA Says (01/31/2022)

After months of letters, meetings, and congressional hearings, the IRS announced it would suspend many automated notices and implement two so-called surge teams to address the processing backlog, AICPA noted. It called the measures welcome but said it would continue to encourage the IRS to do more.

“Implementing all of the coalition’s recommendations is an important and necessary next step to ensure that the millions of Americans who have extended their tax filing to October can do so with minimal stress and anxiety,” the letter said.

AICPA’s missive follows an April 5 letter to IRS Commissioner Chuck Rettig from the American Bar Association’s tax section urging a suspension of most new correspondence audits and automated underreporting notices. The ABA letter cited the sea of unprocessed returns and unopened correspondence in also urging the agency to improve communication with taxpayers about amended returns and to streamline penalty relief.

In addition, the IRS should “substantially lengthen the time between notices” about examinations and for notices it doesn’t pause, the tax lawyers’ letter said. It noted that over 70% of IRS audits are conducted via correspondence and that through its automated underreporting program, the IRS compares tax returns against information from third parties, with taxpayers then contacted to address discrepancies. Correspondence audits and the automated underreporting program will burden the IRS and taxpayers until the agency is able to respond to its unopened correspondence, putting long-term voluntary tax compliance at risk, the ABA section asserted.

The IRS didn’t respond to requests for comment on the AICPA statmeent and the ABA tax section letter.