Tax Byte

with Jessica L. Jeane, J.D.

Congress demands answers from Rettig on IRS backlog

Jessica L. Jeane, J.D.

Jessica L. Jeane, J.D.

Sr. Director, Tax & Product Development

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Remember the unprecedented IRS backlog and the ensuing chaos it created for tax pros and taxpayers alike? Of course you do, and it’s not yet a thing of the past.

Crush It, Crush It Real Good

A bipartisan, bicameral group of over 90 lawmakers in an August 15 letter demanded answers from the IRS concerning the agency’s ongoing backlog, which Commissioner Rettig has promised would be “crushed” by year’s end.

During an April Senate Finance Committee hearing, Rettig told lawmakers that the IRS would return to a “healthy state” by the end of 2022. According to a subsequent National Taxpayer Advocate (NTA) report to Congress, however, the paper return backlog had actually increased by 1.3 million, and refunds on average are still taking six months or longer.

Salt-N-Pepa were unavailable for comment.

Automated Collection Notices

The letter, spearheaded by Sens. Bob Menendez (D-N.J.) and Bill Cassidy, M.D. (R-La.), reiterates lawmakers’ consistent push recently for the IRS to better remedy tax administration and customer service issues. “[W]e are writing again to urge the IRS to extend the suspension of automated collections, continue the pause on automated notices, and keep its surge teams in place until hiring challenges and processing backlogs are adequately addressed,” the lawmakers wrote.

Although erroneous automated CP notices issued by the IRS have been an ongoing problem the last year or two, the IRS last February temporarily suspended its issuance of such automated collection notices stating the pause would last until the backlog was remedied. Adding fuel to the fire, however, the IRS announced on July 27 that some payments made for 2021 tax returns had not been correctly applied to joint taxpayer accounts, resulting in another round of erroneous balance due notices (CP-14 notices).

It’s fine. It’s totally fine.

Processing Backlogs

Specifically, lawmakers’ August 15 letter requests a response no later than August 19 to the following questions:

  1. How do you plan to keep your promise to eliminate the backlog?

  2. What is a “healthy level” of unprocessed tax returns? How does this level align with average carryover levels, prior to the pandemic? Please provide the average carryover level over the ten years prior to FY2020, and the current carryover levels.

  3. How would you quantify a “manageable” carryover level? How does this compare to average carryover levels prior to the pandemic? Please provide a breakdown of average carryover levels for accounts management, submission processing, and returns in suspense.

  4. By how much do you estimate the carryover level will increase following the October 15, 2022 extension filing deadline?

  5. Do you believe your answers to questions 2-4 call your end-of-year estimate for a “healthy” IRS into question?

  6. For this filing season, what is the average refund delivery period? For comparison, please provide the average refund delivery period over the past ten years including the COVID-19 pandemic and excluding the COVID-19 pandemic.

  7. How long will the surge teams continue? Will they continue through the end of the fiscal or calendar year, or beyond?

  8. What effect does the use of surge teams to process the backlog have on the IRS’ other activities, particularly answering phones?

  9. What steps is the Agency taking to speed up its processing of tax returns? Please specifically note whether the agency prioritizes the processing of returns with refunds.

  10. What is the status of IRS efforts to implement scanning technology, as recommended by the NTA?

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