National Taxpayer Advocate Erin M. Collins released her first report to Congress June 29, 2020. She was sworn in on March 30, 2020 while IRS offices were closing one by one across the country. The IRS has begun reopening its operations, but it will take some time before they are restored to full capacity. The disruption caused by the COVID-19 pandemic has had an enormous impact. These are the general taxpayer challenges she presents in her report. Her report can be found at irs.gov.
Unopened Mail and Paper Returns: Among the taxpayer challenges arising from COVID-19, and a challenge for the IRS (I might add) is the about ten million pieces of unopened paper mail sitting in trailers at IRS campuses. The IRS could not process or respond to written correspondence from taxpayer because their operations were shut down during the coronavirus pandemic.
Taxpayers who filed a 2019 paper return and are entitled to refunds may be in for a long wait. The IRS had to suspend the processing of paper tax returns, and as of May 16, it estimated it had a backlog of 4.7 million paper returns. Although the IRS is reopening some of its core operations, it is not clear when it can open and process all the returns sitting in mail facilities.
Delayed Flagged Returns: All tax returns claiming refunds are passed through filters designed to detect identity theft and other types of refund fraud. Some of these filters produce “false positive rates” of more than 50 percent (meaning that more than half the taxpayers whose returns are stopped by certain filters are entitled to the refunds they claimed). Affected taxpayers are often asked to mail in documentation to substantiate their claims, but the IRS has not opened or processed many of their responses, delaying their refunds. Refund delays can have a significant financial impact on low-income taxpayers, as refunds often constitute a significant percentage of their annual household incomes. Notably, some of the refund delays have been generated by claims for the earned income tax credit or additional child tax credit.
No Taxpayer Assistance: Taxpayers who have needed help from the IRS have had difficulty obtaining it. The IRS shut down its Accounts Management telephone lines on March 21, 2020, so taxpayers could not reach a live assistance by telephone. The IRS shut down its Taxpayer Assistance Centers on March 20, 2020, making it impossible for taxpayers to obtain in-person assistance. The IRS also shut down its mail facilities, so it was unable to log or process taxpayer responses to compliance notices.
There was a substantial reduction in Volunteer Income Tax Assistance, Tax Counseling for Elderly, and Low-Income Taxpayer Clinic services.
Confusing Old Dates on Compliance Notices. IRS systems prepared over 20 million notices during the pandemic that could not be mailed due to closure of notice production centers between April 8 and May 31. The IRS is mailing these notices now. However, some collection notices bear old dates and include response deadlines that often have passed. The IRS plans to include “inserts” with these notices explaining that response deadlines have been postponed, but the report expresses concern that receiving compliance notices with response deadlines that have passed will be confusing and concerning to many taxpayers who may not read the inserts.
In addition, The National Distribution Center was shut down, depriving taxpayers of a means to acquire pre-printed forms.
The only resources readily available during the coronavirus shut down were IRS.gov and automated telephone lines.
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Your local advocate’s number is in your local directory and at Taxpayer Advocate Service – Contact Us.
If you need funding, apply now. I am still working online.
Patrick St. Cin
W – 512-213-2271
M – 505-239-3026
Photo reference: Edvard Munch between 1893 and 1910.