The IRS has a huge backlog on its hands due to its pandemic closing; lack of Congressional funding; increase of IRS responsibilities regarding stimulus payments, unemployment compensation benefits, advanced child tax credit payments; early IRS retirements resulting in a loss of its most experienced agents; and poor U.S.P.S. mail service.
The IRS Crisis in a Nutshell
Currently, several millions of taxpayers are waiting for their refunds and stimulus payments. Millions more are trying to settle issues with past tax returns and are unable to speak with someone at the IRS. Taxpayer anxiety builds with each warning notice received from the IRS assessing additional interest and penalties. The Washington Post quoted that if a taxpayer calls the IRS, he has a 1-in-50 chance of speaking with an agent.
How Big of a Tax Return Backlog?
At the end of the 2020 tax filing season, it was reported that the IRS had a backlog of 35 million unprocessed tax returns. Most of those unprocessed returns are due to the absence of IRS employees when the IRS shut down during the pandemic. Due to recent legislative changes, the IRS had to process a historically high number of returns manually to check for identity theft to ensure that scammers were not receiving refunds not due them. The current backlog is estimated at 15 million unprocessed returns (approximately 1 in 10 taxpayers). At the current IRS pace of addressing back tax returns, it is expected that the IRS will catch up around October 25 of this year.
What Happens if a Taxpayer Calls the IRS?
During the 2021 filing season, the IRS received 167 million telephone calls — over four times the number during the 2019 filing season. At one point, the IRS received calls at the rate of about 1,500 per second. How did the IRS manage to answer that many calls?
The simple answer is that the IRS was not able to handle that many calls. On the 1040 line, the most frequently called toll-free IRS number, only 3 percent of 85 million calls from taxpayers reached a phone assister. The Washington Post reported that Congressional funding only allowed the IRS to provide a 60 percent level of service. Thank you Congress. Michelle Singletary, a columnist for the Washington Post, said to think about that for a second, because that’s all it takes to see the callousness of this choice by Congress. The IRS, if it receives an expected $318 million in funding to increase taxpayer assistance, hopes to answer 75 percent of calls received. That falls short of the IRS goal to answer 80% of the calls it receives. That’s right, the IRS goal is not to answer 100% of the calls it receives due to budgetary restraints.
Nina Olson, the former director of the IRS’s taxpayer advocate office, said that “When the level of service gets so poor and correspondence and problems aren’t being addressed, it just gets cyclical. You call and then you are cut off after you are on hold. Then you write a letter explaining the situation, but no one answers it. And on it goes until sometimes taxpayers just give up and pay a bill that they really don’t owe, just because they are afraid of what might happen to them.” Does this sound familiar to your situation? This capsule explanation by a former IRS employee is a very good reason why using an IRS tax resolution specialist should be considered rather than self-representation.
Tax Tip #1
Nobody enjoys opening an envelope showing the sender as the IRS. Yes, bad news may be contained in the IRS notice, but it is most important that the IRS letter be opened immediately upon receipt as there are usually deadlines stated in which to reply to the IRS or to appeal a proposed tax assessment. Not opening an IRS letter does not make the problem go away. Often, by not timely responding, the taxpayer has simply compounded the problem. Taxpayers have certain rights, but those rights must be acted upon within certain time deadlines.
Tax Tip #2
Regardless of how simple you believe the response can be handled by yourself, send a copy of your draft IRS response letter to your tax advisor and ask them for their thoughts. If you make a misstatement of fact or your proposed response can be misinterpreted, you need to realize that your response becomes part of your tax record and can be difficult to correct. You could inadvertently have made your situation worse.
Tax Tip #3
Never send original tax documents to the IRS. Always send photocopies in case the IRS misplaces your response (sadly, this happens far too often) and those documents need to be resent.
Tax Tip #4
Always make photocopies of what you send to the IRS. If you are unable to resolve your IRS issue at the lower administrative level and you need to appeal the IRS’s decision, your tax professional will need to see what you have shared with the IRS.
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 © 2021 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.