Don't Mess With Taxes

Here's some news that's not news for many taxpayers. The Internal Revenue Service is still running behind in its processing of tax filings and getting payments, including refunds, out to taxpayers.

What is new, though, is that the admission comes from the top of the tax agency.

IRS Commissioner Charles Rettig praised the efforts of his employees during the ongoing COVID-19 pandemic in a recent A Closer Look column. The online IRS publication offers agency executives the chance to discuss issues of interest to taxpayers and the tax community.

But Rettig also acknowledged in the Sept. 14 piece that "despite our best efforts, pandemic-related issues are still causing us to experience record levels of activity that continue to affect operations across the agency, including the processing of tax returns and refunds."

And this has undermined one of the IRS' primary jobs.

"Our goal is to provide the quality of assistance taxpayers deserve, but we have been unable to satisfy this goal despite recent efforts to overcome significant challenges," wrote Rettig.

Reasons for problems: Rettig elaborated on some of the agency's specific recent challenges.

In the first six months of 2021, Rettig wrote, the IRS received 199 million phone calls. That's five times the normal annual volume.

In addition, IRS employees have manually reviewed 11 times more tax returns this year, a total of 11 million, to correct errors and gather missing information from taxpayers. Those reviews have produced another reason for the delays.

Rettig says the IRS has had to correct significantly more errors on 2020 tax year returns than in previous years. This includes needed corrections to Recovery Rebate Credit amounts or validation of 2019 income used to figure the Earned Income Tax Credit and Additional Child Tax Credit.

The number of returns needing manual review reached historically high levels, he noted, peaking at 9.8 million on May 1.

Dealing with work and reactions: The unusual workload is the hand that the coronavirus and Congress, which added to the agency's workload by tasking it with the handling of new pandemic-related payments, dealt the agency these last two filing seasons.

But taxpayers and the tax community, which are under their own COVID-related stresses, haven't cut the agency much slack.

Rettig says he understands.

"We know this has been and continues to be a frustrating time for many taxpayers and tax professionals – and it’s been a challenging time for all of us at the IRS as well. We have done the best we could under the circumstances, and we will continue to do our best as we face the current challenges."

Will it be enough? Probably not, from a public relations or actual operational perspective.

But the IRS exec is hopeful.

Getting back to normal levels: In an expanded look at how the agency is doing during COVID operations, Rettig noted that the inventory of remaining individual tax returns is being reduced, even as the IRS is receiving 2020 returns that are coming in prior to the Oct. 15 extension deadline.

"We typically receive between 1 million and 1.5 million pieces of mail each week and are able to process that amount on a weekly basis," he said.

"It's critically important to get back to our regular levels before the tax season begins in early 2022, because we are hoping to be back to normal operations next year for processing returns and tax refunds," he added.

We'll see.

In the meantime, if you're still waiting for a refund or have yet to receive your September Advance Child Tax Credit, which is one of those added COVID tasks assigned the IRS, the best advice any of us can offer is to be as patient as possible.

Tracking IRS progress: You also can check out how the IRS is doing at special mission-critical functions web page. The Sept. 17 update there says — 

"We have processed all error free returns received prior to April 2021 and continue to work the returns that need to be manually reviewed due to errors. We are continuing to reroute tax returns and taxpayer correspondence from locations that are behind to locations where more staff is available, and we are taking other actions to minimize any delays. Tax returns are opened and processed in the order received. As the return is processed, whether it was filed electronically or on paper, it may be delayed because it has a mistake including errors concerning the Recovery Rebate Credit, is missing information, or there is suspected identity theft or fraud. If we can fix it without contacting you, we will. If we need more information or need you to verify that it was you who sent the tax return, we will write you a letter. The resolution of these issues could take 90 to 120 days depending on how quickly and accurately you respond, and the ability of IRS staff trained and working under social distancing requirements to complete the processing of your return."

That's not the best news, but at least the IRS is making a dent in its workload.

Until the IRS gets everything back into more normal pre-COVID ranges, we're all stuck with the frustration caused by the large amount of manually processed returns, limited information on tax return processing status, refund delays, and the difficulty reaching IRS employees, especially when seeking help in connection with new tax issues from recent legislation.

Like I said, patience. And maybe a yoga and/or meditation class or app.

You also might find these items of interest:

• IRS issues 2021-2022 priority guidance plan
• IRS delivers another 1.5 million unemployment-related tax refunds
• 6 Advance Child Tax Credit questions still being asked … and the answers!

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