Last month, the National Taxpayer Advocate’s office released a grim report on the conditions at the IRS. If you have tried to reach the IRS via phone during the last year, you know full well how difficult it is to reach someone. Well, we now have statistics to back this up. In this report, it was divulged that In Fiscal Year 2021, the IRS received about 282 million telephone calls. Customer service representatives answered only about 32 million, or 11 percent, of those calls. So roughly only 1 out of every 10 phone calls was answered. That is unacceptable! At the close of the 2021 filing season, the IRS had 35.3 million returns awaiting manual processing. As the IRS begins its 2022 filing season, there will be millions of unprocessed returns resulting in even longer delays for taxpayers who have been waiting patiently for far too long. In addition to unprocessed returns, there are millions of items of correspondence also waiting to be opened and answered. Taxpayers have been receiving delinquency notices, many generated automatically, related to these unprocessed returns and often unopened taxpayer correspondence. Can you see the vicious cycle we have here? The IRS has reportedly ended sending certain tax notices in the interim until this logjam can be cleared.

To add even more complexity, when taxpayers file their 2021 tax returns, millions who received Advance Child Tax Credit payments will have to reconcile the monthly advanced payments they received with the amounts for which they are eligible. Thankfully, all taxpayers who received this advance payment should have already received a letter showing the amount they received in 2021. Similarly, all taxpayers who received any payments under third round of stimulus payments, authorized by the American Rescue Plan Act, should have received a letter showing the amount that was paid to them. Anyone entitled a higher Stimulus amount than what was paid will have to claim that as a credit when filing the 2021 tax return 1. Given these additional items specific to tax year 2021, there will most certainly be extraordinary processing and refund delays. It has the potential to be much worse in 2022 than it was in 2021. Filing your tax return electronically and properly reconciling advanced child care payments and the third stimulus payment can certainly expedite the processing of your Federal tax return.

Last year, more than 75 percent of individual income tax returns resulted in a tax refund. If you are routinely receiving large refunds year after year, you might want to contact your tax preparer at our Firm to make sure your Federal and State tax withholdings are not too excessive. Why let the Federal and State governments be in control of thousands of dollars of YOUR hard earned money? We can help you adjust your tax payments/withholdings to be more in line with your tax needs.

1These notifications are necessary to file a complete and accurate return.  If you received either Advance Child Tax Credit payments or a third Stimulus check and didn’t receive confirmation of the amounts received in the mail, you can access those amounts through your individual account on the IRS website.  Let us know if you need assistance retrieving this information.

Article Submitted by – Michael J. Reynolds, CPA, CEPA