LFC Comments by T. Paine: Most people do not even think about the problems at the Internal Revenue Service. This email correspondence we received will be very enlightening. What happens if the IRS implodes?
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| Dear friends and clients…………from a newsletter I receive from the best in the country!! We file most returns electronically but some amended returns, ERC refunds, correspondence, follow ups, have to be sent manually. The situation is worse than we thought – the Advocate’s office paints a grim picture!! Last week (January 12, 2022) the National Taxpayer’s Advocate Office released a sad report on the conditions at the IRS and it is worse than most people thought. We professionals already know that the phone is never answered, that letters lie unopened for months and that 90-day and similar notices are being incorrectly issued even though the IRS cashed the check months earlier. The response times to these duplicate letters will double or triple the announced IRS paper backlog and my personal fear is that we are in a state of collapse in the US income tax system. Since the Taxpayer Advocate’s office announced on November 10th that they would not accept new cases I recommend all IRS issues be routed through the office of your client’s elected Member of Congress. They seem to be ignoring or unaware of the problem, and they are the only solution. Additionally, all automated compliance actions and letters need to be stopped immediately. Here are some reprints of various paragraphs of the Advocate’s report: As of December 18, 2021, the IRS reported it had a backlog of 2.3 million unprocessed Forms 1040-X, Amended U.S. Individual Income Tax Return, and that processing times “can be more than 20 weeks instead of up to 16. Delays in processing Forms 941, Employer’s Quarterly Federal Tax Return, and Forms 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, have been significant. As of December 15, the IRS reported it had 2.8 million unprocessed Forms 941 and about 427,000 Forms 941-X that cannot be processed until the related Forms 941 are processed. In FY 2021, the IRS received about 282 million telephone calls. Customer service representatives (CSRs) only answered about 32 million, or 11 percent, of those calls. Where the IRS issued compliance notices, the IRS’s automated systems ordinarily move cases to the next step in the compliance process if a taxpayer’s response is not recorded within a specified number of days. For example, failure to respond to a math error notice within 60 days means the tax is assessed and the taxpayer loses the right to contest it in the U.S. Tax Court. Failure to pay an assessed liability means the case is moved to the collection function. To prevent enforcement actions from taking place before the IRS processed taxpayer responses, the IRS generally reprogrammed its systems to allow additional time. But there were gaps. For example, we are aware of cases where taxpayers received notices of intent to levy while their responses requesting abatement of a math error assessment or disputing a proposed examination adjustment were still awaiting processing, or their amended returns had not been processed. For example, the IRS finished the 2021 filing season with a backlog of 35.3 million returns that required manual processing.  The IRS had a backlog of over 35 million returns at the end of the 2021 filing season. The IRS currently has 4.75 million pieces of paper correspondence that have not been worked. |
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Categories: National News