The IRS is slowly working on a huge paper jam.
The House Ways And Means Committee would like answers from the Internal Revenue Service. In a number of recently released letters, members of the Tax Oversight Committee have reprimanded the IRS for sending false tax notices, raised concerns about a slow start to the 2021 tax season, and blocked customer service phone lines, demanding a new, later tax deadline for the 2020 tax return at an order backlog of 6.7 million tax returns for 2019.
The typical deadlines currently apply: taxpayers have until Thursday, April 15, 2021 to file their tax return for 2020 and pay the taxes owed. The IRS began accepting tax returns for 2020 on February 12, two weeks later than originally anticipated (there were all of those round two stimulus payments that needed to be released, as well as reprogramming the IRS systems for December tax law changes ). Note: The IRS announced today that Texas winter storm victims will have until June 15 to file their tax returns and pay any taxes that would have been due April 15 (or March 15 for businesses) which is routine in such local disasters.
Here are some of the problems and how they can affect you.
Slow start to the 2021 tax season. In its first weekly report on the 2021 tax returns season to the Ways And Means Committee, the IRS said it had received approximately 20 million tax returns and processed 14 million of them as of February 12. For comparison: by February 14, 2020, the IRS had received and processed 40 million returns. The IRS had already warned taxpayers of possible delays and a challenging tax season. Now that the statistics show the delays are real, the committee demands to know how quickly returns are being processed. The IRS estimates it will receive 160 million individual tax returns this year. If you’ve filed a tax refund and are due, see the IRS, Where’s My Refund? Tool to get a personalized refund date. Most refunds are sent within 21 days of being submitted electronically.
Jammed customer service phone lines. The committee has asked the IRS to improve customer service by adding assistants to its phone lines (letter dated Feb. 19) as taxpayers are struggling to get through. Call volume has tripled over the same period last year, and only about 25% of taxpayers seeking assistance make it to the IRS. Of that 25%, equivalent to 6 million calls, only 2.7 million taxpayers spoke to a customer service representative and 3.4 million calls were routed to an automated message. Taxpayers also visit the IRS website in droves. Visits have more than doubled year over year at this point, from 165 million in 2020 to 369 million in 2021. Before you pick up the phone, check out the IRS website for helpful Q&A such as Q&A the second economic impact includes payment.
Order backlog of 6.7 million tax returns for 2019. The committee also asked the IRS when the 6.7 million tax returns for 2019 and the previous year on its order book will be processed. As of November 24th, the IRS had an order book of 7.1 million returns. At the end of 2020 it was 6.9 million, and the latest data shows a backlog of 6.7 million as of January 24th. At this rate of 200,000 monthly returns, it would take three years to work through last year’s backlog of paper. There’s another estimated 16 million paper returns coming in for 2020, not to mention business returns. This backlog puts taxpayers in trouble. Some people are waiting for refunds in 2019; Some people are waiting for stimulus payments that would be based on 2019 returns.
To make matters worse, the IRS sent approximately 260,000 CP59 notices to taxpayers that the IRS claimed had not filed a 2019 tax return. The IRS issued a statement stating that those who filed their 2019 return but received the CP59 notice can ignore the letter and not take any action as the IRS is still processing the 2019 return processed. It is likely that many taxpayers who have received CP59 notices have already filed tax returns that the IRS claims are pending. Tax professional Claudia Hill from Cupertino, California is one of them. “I am appalled by the numbers! I hate to think that I’m one of them, ”she says. In her case, she had to file her 2019 return on paper because she was a victim of identity theft, and she filed it by October 15. According to the IRS’s February 17 Update of Mission Critical Functions, the IRS is processing tax returns from July 15, 2020 in some cases. In the case of a client who filed a paper charity trust tax return with an IRS representative who provided the evidence that it came in, Hill said he had looked everywhere for it but had not found it. Please send him a copy. If this happens to you, for security reasons, write a duplicate on each side of the copy and include a copy of your original certified postal receipt. Hill, a registered agent, consoled her client: “It’ll work; they will process it at some point. “The committee’s message to the IRS about the backlog (another letter dated February 19) was tougher:” Taxpayers deserve better, and the IRS has to do better. ”
Could the deadline for the April 15 tax day be postponed to July 15, 2021?
In a February 18 letter, Ways and Means Democrats, led by Subcommittee on Supervision Chair Bill Pascrell Jr. (DN.J.), urged the IRS to stop the season for tax filing given the ongoing nature of the Covid to be extended beyond April 15, 2021 -19 pandemic and the shortened filing season due to the late start date. Last year taxpayers and the IRS looked at the pandemic outbreak and initial closings, and the April 15 deadline was postponed to July 15. This year is arguably more difficult as taxpayers are still affected by the pandemic and they’re talking about two key tax laws (the Cares Act in March and the Appropriations Act in December) that are making tax returns particularly difficult this season. In a letter dated February 19, signed by Chairman Richard E. Neal (D-Mass.), The committee requests the IRS “to continue to update the committee on filing season questions and concerns, including whether the filing season should be extended “.
Further reading: IRS warns of delays and challenges leading up to the 2021 tax season: 10 tax tips for filing your 2020 tax return