The IRS says it is doing all it can to help relieve the stress of taxpayers. The Service has decided to suspend automated notices to taxpayers who had already been credited, but the IRS had not recorded their tax filings.
“In many situations, the tax return may be part of our current paper tax inventory and simply hasn’t been processed. Stopping these letters — which could have otherwise been sent to thousands of taxpayers — will help avoid confusion,” stated IRS in a statement.
What the IRS is struggling with, ever since the onset of the pandemic, is the humongous bulk of paper Tax returns sent to the Service by mail.
Though these paper returns are routine work that the IRS has to process each tax season, the pandemic had IRS staff and everyone else locked indoors. The lockdown being implemented all across the country simply multiplied the backlog of paper returns.
What More Is the IRS Doing to Help the Taxpayers?
The IRS has stated that it intends to increase the resources it uses to process the tax returns each season. This move will help to accelerate the entire process, bringing relief to the fatigued taxpayers. Moreover, the IRS has also promised to make its staff work overtime, wherever possible, to ease the flow of the paper returns being processed.
Did the IRS Take the Steps Under Pressure?
IRS’s recent steps were taken after many demands were put forward by the Tax Professionals United for Taxpayer Relief Coalition. They urged the IRS to do the efforts necessary to relieve the stress and confusion faced by many taxpayers across the country.
Members of the House and the Senate also requested the IRS to take notice of people’s suffering, who was being plagued by the automated notices being sent out by the IRS. Amended 941 Forms were in many cases required by the Service as part of the procedure for getting the Employee Retention Credit (ERC), part of the CARES Act 2020.
The automated messages addressed and called out the taxpayer to submit his/her tax returns. Consequently, over 200 members of the House sent a joint letter to Janet Yellen, on January 26th, requesting relief for taxpayers due to “unprecedented challenges” being faced by the IRS in terms of the backlogged filings.
The letter also highlighted the challenges faced by small business owners who applied for pandemic-related relief funds according to the instructions laid out by the IRS and the Small Business Administration.
The owners of these businesses are still waiting for the promised relief for over two long years now. As of now, the Service has about 2 million Form 941 (Employer Quarterly Tax Returns) that must be processed before 500,00 amended Form 941s can be processed.
Apart from the members of the House, professional tax advisory associations formed a coalition to put forward a united response to the IRS. They requested the service to not only stop sending out automated messages but to also take other measures.
Their letter was sent on January 14th, which also included the steps which Tax Professionals United for Taxpayer Relief Coalition deem are necessary for this time of difficulty, outlined below:
- “Halt Automated Collections until at least 90 days after April 18th, 2022
- Delay the collection process for filers until any active and pending penalty abatement requests have been processed
- Streamline the penalty abatement process for taxpayers without the need for any correspondence in written
- Provide targeted tax penalty relief for taxpayers who paid at least 70 percent of their taxes due for the 2020 and 2021 tax year
- Accelerate the processing of tax returns and send out timely responses to TAS and congressional caseworkers.”
How Did the Irs Respond to These Suggestions?
The IRS has partially accepted the suggestions, such as halting automated letters in some cases only. It stated that all automated letters could not be halted because for them to be legally binding, there is a certain timeframe within which the letters should be sent out, otherwise the letters will lose their efficacy.
Furthermore, the IRS stated that Congressional action would have to be taken to remove some of the mandates currently in place within the complex tax system of the country.
Response of the Tax Professionals United for Taxpayer Relief Coalition
The coalition says that more can be done on part of the IRS without the need for legal reforms to the existing tax system. In the statement, they demanded more: “Simply put, more is needed to offer meaningful relief to individuals and small businesses, and we urge the IRS to implement all of our recommendations”.
“The IRS should temporarily suspend all automated compliance actions as they did with the onset of the COVID pandemic. It will go a long way to help taxpayers, tax practitioners and the IRS better navigate through this difficult tax season.”