My friend Art called me last week to tell me that he received a notice from the IRS demanding that he file his 2019 tax return. Art filed his returns months ago and had the receipt from the post office to prove it. He submitted a second copy in response the letter. A day later, I sent him a note about how the IRS had erroneously issued about 260,000 “CP59” notices to taxpayers stating they didn’t filed their 2019 federal tax returns. The IRS admits that it hasn’t completed processing of all 2019 returns and that these notices should not have been sent out. Art was livid.
Most of the returns that were electronically filed have been processed but paper documents have been piling up since IRS shut down its processing centers in March of last year due to COVID. Many IRS employees have been working from home where they are unable to access the paper documents. The IRS is indeed between a rock and a hard place and Congress is turning up the heat. Last week both Democrats and Republicans on the House Ways and Means Committee sent letters to IRS Commissioner Charles Rettig complaining about poor customer service.
Republican members of the Subcommittee on Oversight, on February 17, 2021, sent a letter expressing their concern about the ongoing backlog of unprocessed 2019 tax returns. They complained about there being over 11 million unprocessed 2019 individual and business tax returns. Their constituents have been complaining that they have been waiting for their tax refunds since last spring.
Three questions were asked, summarized as follows: 1. What is the plan for processing this backlog? 2. What should taxpayers who have not received their refunds do? 3. How will the IRS make sure taxpayers do not suffer adverse consequences for their 2020 returns caused by delays in processing their 2019 returns?
Democrats wrote the Commissioner Rettig on February 19, 2021 expressing their concern about the current tax filing season and requesting information on how the IRS plans to improve customer service. They complained about the slow pace of processing 2020 tax returns and pointed out that IRS service centers in Kansas City and Austin were closed due to bad weather. The Democrats had three questions too, asking when the 6.7 million 2019 and prior year tax returns in the backlog will be processed, when the returns for 2020 filed so far will be processed, and when staff will be added to IRS taxpayer assistance efforts.
ProPublica, in an article dated Feb. 16, 2021, traces the IRS’ “challenges” back to the Obama administration when Republicans who objected to the Affordable Care Act successfully pushed steep budget cuts to the IRS. Since 2010 the IRS has experienced staff reductions of over 70,000 employees due to a hiring freeze. IRS operations were shutdown in 2013 and again in 2019 due to partisan disarray in the US Congress. The IRS’ workload has increased because it has been tasked with distribution of economic stimulus checks at the same time as disruptions in operations due to COVID.
We expect the IRS’ problems to continue. They have not made the investments in personnel or technology to keep up with Congressional and taxpayer demands for better service.
Mark S Gleason CPA