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If you’ve been listening to the news over the past couple of years, you’re aware that the IRS is facing serious challenges. And, while the IRS’ issues cannot solely be blamed on COVID-19, the pandemic exposed an already growing number of problems, namely, a lack of updated systems and a lack of personnel to handle the increase in tax returns and calls.
At the end of the 2021 filing season, over 35 million returns were backlogged. It wasn’t until June of 2021 that all 2019 returns were completely processed. Add the fact that 17 million returns were paper filed in 2021, and you have a recipe for disaster as it took up to eight months to process a paper return that year. This flood of delayed returns, in turn, led to an increase in phone calls to the IRS. Over the course of fiscal year 2021, the IRS received approximately 282 million phone calls and, at one point, received 1500 calls per second with only 11 percent being answered, according to the National Taxpayer Advocate Annual Report to Congress.
Will the new $80 billion in funding provided by the Inflation Reduction Act help with these issues? Only time will tell. Perhaps the funding will allow the IRS to update its aging technology so that processing tax returns can be completed in a more timely and efficient manner. Perhaps the 87,000 new employees will alleviate the load on customer service representatives to answer the hundreds of thousands of phone calls coming in each year.
According to an opinion piece by The Editorial Board of The Wall Street Journal titled “This Is Your IRS at Work,” the picture is much bleaker and this additional funding will not solve the agency’s problems but only provide funding for more incompetency. The opinion, referencing reports of the Treasury Inspector General for Tax Administration, claims that the problem lies not in the lack of funding, but in the lack of proficiency by the IRS to properly calculate certain tax credits available to individual taxpayers. “By the IRS’s own admission, some $19 billion–or 28%–of earned-income tax credit payments in fiscal 2021 were ‘improper’… 26% ($1.9 billion) of its American opportunity tax credits…and 27% ($541 million) of its net premium tax credits (Obamacare) were improper…[and] the IRS acknowledged that 13% ($5.2 billion) of its enhanced child tax credit payments were improper.”
So, as a taxpayer, what are you to do when faced with an over-burdened IRS? First and foremost, we recommend that you hire an experienced and highly competent tax team to prepare your taxes who can also file them electronically, cutting down on the processing time that filing a paper return creates. Secondly, if you do receive a notice, make sure that your tax team is prepared to handle the issue on your behalf with the IRS all the way through to its completion.
Here at BMSS, we are beside you through the entire process, from start to finish, to make sure you have the peace of mind that comes with knowing your tax matters are being handled correctly, efficiently and timely. Our experienced professionals undergo the training needed to stay on top of the ever-changing wave of tax credits and laws each year. After preparation, the returns undergo a thorough review process before they are, in most cases, electronically filed with the federal and state governments which are then monitored closely by our administrative staff to make sure the returns are accepted.
If you find yourself the subject of an IRS notice, we have developed experience and insight in dealing with the local IRS office, the Practitioner Priority Service, the Taxpayer Advocate, and other offices of the IRS. If BMSS prepared your tax returns and, if you request to engage our services, we can assist with tax notices until resolution is achieved. Our fees for resolving matters raised by the IRS will vary based on your individual circumstances but through our experience and available tools, we may be able to provide efficiencies for you.
One of these efficiencies is that BMSS employs a dialer bot system that allows our tax professionals to call the IRS without having to spend hours on the phone waiting to talk to a live agent. In many cases, we can get the issue resolved quickly and fairly for our clients. This means less time worrying about your taxes and more time thinking about what’s important to you.
If you have any questions, or if you’ve received a tax notice and need assistance, please reach out to our trusted and experienced tax professionals at (833) CPA-BMSS to see how we can help.
In earlier issues of the Beyond the Bottom Line, we discussed the significant and ongoing issues that taxpayers are facing when dealing with the IRS (The IRS’ Ever-Growing Backlog and Suspension of Selected Automated Notices and IRS “Report Card” Warns of a Challenging 2022 Filing Season for Taxpayers and Tax Professionals).
2021 National Taxpayer Advocate Annual Report to Congress Executive Summary https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2022/01/ARC21_ExecSummary.pdf
“This Is Your IRS at Work” Wall Street Journal, August 20, 2022