A group of Senate Republicans, led by Senator Mike Crapo, R-Idaho, a senior member of the Senate Finance Committee, is calling on the IRS to do everything it can to help taxpayers this season.
In one letter On Thursday at Treasury Secretary Janet Yellen and IRS Commissioner Chuck Rettig, lawmakers asked the agency to provide taxpayers with targeted temporary relief during one of the toughest tax seasons in recent memory.
Taxpayers and tax professionals have faced problems this season getting help from the IRS, as the agency remains understaffed and overwhelmed with a backlog of new tax returns and millions of tax filers. old returns filed last year that have not yet been processed. Tax groups have been lobbying the IRS to at least disable automated notices that have been sent by IRS computer systems asking them to file tax returns and pay balances that may have be already mailed, but not yet opened or fully processed. On Wednesday, the IRS announced that it would suspend many notices until it resolves the backlog (see the story).
In addition to the problem with automated notices, the senators identified many of the challenges their constituents face and recommended several areas where the IRS could use its existing authority to provide taxpayer relief without requiring the adoption of legislation in the equally divided Senate.
“We continue to hear from voters who have not yet had their paper and amended returns processed, and due to a lack of information on IRS processing dates and times, we are unsure if their returns have already reached the IRS or whether they should re-file,” the lawmakers said. “Other taxpayers are waiting for their tax refunds, some tied to their 2019 tax return. This situation is untenable. When our constituents cannot get help from those charged with administering our tax laws, it diminishes the integrity of our voluntary tax system.
The senators recommended that the IRS halt automated collections for a significant period of time; provide targeted tax penalty relief to taxpayers; delaying the collection process for reporters until all active and pending penalty reduction requests have been processed; and communicate the status of IRS operations in a clear and timely manner, among other recommendations.
The American Institute of CPAs endorsed the lawmakers’ recommendations: “The AICPA is pleased to support members in their calls for the IRS to take specific action to mitigate the anticipated challenges of the current tax filing season. income,” said AICPA Vice President of Taxation Edward Karl. in a report. “We wish to highlight the recommendation to amend the complex and confusing implementation of Schedules K-2 and K-3 by deferring until the next tax year. AICPA members are already concerned about IRS backlogs and dwindling services, so delaying the implementation of Schedules K-2 and K-3 will help the IRS focus on mitigating the issues. current.
For tax years beginning in 2021, partnerships are now required to file Schedule K-2 (Total Partners International Distribution Share Items) and a Schedule K-3 (partner’s share of international income, deductions, credits, etc.), if the partnership has relevant international tax elements, according to PwC.
Tax professionals have also encountered problems with the IRS backlog. “The IRS needs to act faster,” said Donald Williams, owner of Williams Accounting & Consulting, a company with offices in Atlanta and New Orleans. “They need to employ more people because their backlog in processing people’s returns, especially those who owe, makes the accountant look bad. It makes our job more difficult. I had a client we sent a document to nine months ago, and he showed it as delivered nine months ago, and the IRS still hasn’t processed his return. Customer is upset and frustrated. You have to make them understand that it’s not us.
The IRS is shuffling around 1,200 staff from other parts of the agency in a bid to meet demand with new ‘surge teams’ while trying to hire thousands more staff, but not attracting any only a handful (see the story).
Austin Processing Center Closing
In the meantime, the IRS may have to halt plans to close its processing center in Austin, Texas by September 2024. A report released Thursday by the Treasury Inspector General for Tax Administration recommended that the agency suspend those plans until IRS hiring issues and significant backlogs at its remaining processing centers are resolved.
“The IRS continues to experience challenges hiring and retaining adequate workforce to meet its workload in tax processing centers,” the report said. “As of August 2021, TIGTA estimates that the IRS is facing a complete understaffing in its submissions processing function of approximately 2,598 employees. Although the IRS has several initiatives underway to help address its hiring shortages, to date these approaches have not been successful.
The report notes that hiring shortages have been exacerbated since the COVID-19 pandemic and are resulting in millions of unprocessed tax returns and tax refunds not being issued in a timely manner, and taxpayers not receiving tax refunds. timely assistance with their tax account issues. Last June, IRS officials said they would suspend consolidation efforts until early 2022.
During a Tuesday House Ways and Means Oversight Committee hearing with National Taxpayer Advocate Erin Collins, Rep. Lloyd Doggett, D-Texas, suggested the agency should suspend the closure of the facility. .
“With over 10 million paper returns left over from last year, I can understand why you’re describing them as the Kryptonite of the IRS,” he told Collins. “A lot of these returns are processed right here in my hometown of Austin, where, as you know, we have one of three IRS processing centers that process paper returns. I’ve met employees there over the years. I know there is a dedicated workforce out there working hard to address this issue. I have also heard from them over the past few months about some of the challenges they faced being back in the workplace due to questions about adequate protection, social distancing, testing, etc.
He advocated for paying better salaries to IRS employees and increasing the agency’s budget.
Kenneth Corbin, Commissioner of the IRS’ Payroll and Investments Division and Chief Taxpayer Experience Officer at the IRS, responded to the report and the issue of the IRS’ lack of hiring of employees necessary for the submission processing function.
“This is an ongoing challenge as staffing shortfalls have continued to impact the IRS,” he wrote. “These challenges have been exacerbated due to the COVID-19 pandemic. We addressed staffing shortages by contracting with a temporary staffing agency and adjusting hiring during the filing season. We are also consolidating clerical job descriptions to provide more flexibility to move employees to areas within the bid processing function where there are staffing shortages.
The IRS is reassessing whether it will indeed close the Austin facility and, in the meantime, is continuing to hire full-time employees for the 2022 filing season. Any changes in the facility’s decision may not be announced before 2024.