Is “Filter X: to Blame?
Perhaps you are one of the many taxpayers who are concerned that your refund took forever to be processed by the IRS. Your tax professional instructed you to check the IRS’s website Check My Refund Status. Frustrated, you called the IRS (1-800-829-1040) and after being placed on hold for an eternity, the person who answered the phone was of little help.
If your call to the IRS was answered, you were one of the “lucky” taxpayers. During fiscal year 2019, the IRS received approximately 100 million telephone calls, but the agency’s customer service representatives answered only 29 percent of the calls.
The Reason for the Delay
Per the IRS’s Taxpayer Advocate Office (TAO) 2019 annual report to Congress, one of the most serious problems with the IRS is its processing of refunds.
The Internal Revenue Service’s new anti-fraud filters are unnecessarily flagging millions of tax returns and delaying legitimate tax refunds for weeks or months, according to a new report from the TAO.
The report noted that during the 2019 filing season, the IRS used a new refund fraud filter known as “Filter X” that ultimately flagged and stopped the processing of nearly 1.1 million tax returns. About a quarter of those refund delays took more than 40 days to process; about one-half took more than four weeks to be processed, and a review of 309 cases by the TAO showed that 236 taxpayers had to wait an average of 141 days. Moreover, the false positive rate for other non-identity theft refund fraud filters was a whopping 71 percent. That means 71 out of every 100 tax refunds stopped by the IRS’s fraud filters were ultimately determined to be legitimate.
Tax Planning Tip
Delays in issuing refunds often cause financial hardship to taxpayers who depend upon those refunds. While it is nice to receive a refund rather than owe the IRS come April 15th, when you significantly overpay your taxes you are giving the IRS an interest-free loan.
The objective should be to file your tax return with an insignificant refund due you or a small balance owed to the IRS. This “break-even” can be achieved if a taxpayer works closely with their tax professional throughout the tax year to ensure that W-2 wage withholdings or estimated tax payments closely approximate the projected final taxes due.
If you would like to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.
Copyright © 2020 Keystone Financial Solutions, Inc. All rights reserved.
BE SURE TO READ THE DISCLAIMER PAGE: Tax laws, IRS rules and regulations change frequently. Although we hope you’ll find this information helpful, this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher shall not assume liability for any losses, injuries, or damages from the display or use of this information.
About F. Bryan Haarlander, EA, CTRS:
Bryan Haarlander is an IRS licensed Enrolled Agent and who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA, which includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks, Chester, Delaware, Montgomery and Philadelphia Counties, as well as clients in Delaware, New Jersey, New York and throughout the continental USA.
A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.