Talking With the Taxpayer Advocate: The IRS Is Under Stress

[bucolic_frolic]

https://www.kiplinger.com/taxes/tax-filing/602438/talking-with-the-taxpayer-advocate-the-irs-is-under-stress

How has the pandemic affected the ability of the IRS to provide service to taxpayers? Social distancing requirements limited IRS operations that require employees to work in close quarters, and that created several categories of work backlogs. The IRS closed a number of its campuses, so it was parking paper tax returns and correspondence in trailers for a while. Now, my understanding is that they’ve gone through all of that correspondence, and it’s been entered into IRS systems but not yet worked. At the end of January, there were still 6.7 million individual 1040 paper tax returns that had not been processed. If those returns involved a refund, it hadn’t been paid. Taxpayers who file their 2020 tax returns on paper will face similar problems, so I urge tax­payers to file electronically to avoid delays.

The IRS has been tasked with distributing stimulus checks and will also be responsible for administering the expanded child tax credits in the recently enacted stimulus bill. Is the IRS being asked to do too much? The IRS was created as a tax administrator, and in recent decades, it has been asked to administer a number of social programs. The challenge is: Does it have the information technology and infrastructure to be further stretched beyond its traditional tax-collection mission without breaking? The IRS’s outdated information technology, along with reduced funding, has taken a toll on its ability to provide quality service to tax­payers. It will have to be fixed by increasing funding for modernization and infrastructure and staffing. If the U.S. can land a rover on Mars and send pictures back to earth, we should be able to provide a fully functional, fair tax admin­istration system that provides quality service on a daily basis.

What should taxpayers do if they can’t afford their tax bill? They should file their tax return and work with the IRS on the payment portion. If taxpayers don’t file on time, they face a penalty of 5% of the amount due per month, for up to 25% of the tax due. The failure-to-pay penalty is substantially less—just 0.5% of the amount due each month. The IRS has been very flexible with taxpayers, especially during the pandemic.

Do you support requiring all tax preparers to meet minimum competency re­quirements? Absolutely. Tax­payers and the tax system depend heavily on the ability of preparers to prepare accurate tax returns. Over the years, numerous studies have found that noncredentialed preparers routinely prepare inaccurate returns, and some engage in fraud. I believe taxpayers and the tax system would benefit from weeding out incom­petent preparers and bad apples.

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Emphasis my own creation.

[jimfields33]

1. It'd be so nice if they did a nice redo on taxes

Like 1 percent for incomes up to 40K, 5 percent up to 60K, 10 percent up to 80K, 15 percent up to 100K, 20 percent up to 1 million, 25 percent up to 5 million. 35 percent up to the rest. No deductions. Nothing. I think it would ease the burden of the IRS incredibly well. For some reason it seems popular with tax payers but not politicians.

[SoCalDavidS]

2. The IRS Commissioner Is A P.O.S.

A Drumpf appointee, Congress and other Accounting & Tax Preparer organizations had to practically BEG for an extension to the April 15 deadline. They had wanted either June or July, but finally, about 10 days ago, the commissioner gave until May 17.

Even though the IRS is completely backed up, and I have at least 3 or 4 clients still waiting for their 20219 Refunds. They can both say how far behind they are, and at the same time say they're well prepared to move forward with 2020 processing. Bullshit!!

I'm a CPA, so this is why I'm focused on this. As if all of that wasn't enough, now Congress is still BEGGING for an extension to the 1st Qtr 2021 Estimate filing. Because the IRS, in all their wisdom, extended the Individual filing date, but left the 1st Qtr Estimates date as 4/15. So now I have clients e-mailing me in confusion. I should mention that it's much more difficult to do an Estimate for the coming year, until you've completed the prior year. So now, I have to go through and see which clients I need to essentially still complete in the next couple of days, so they can make their Estimates by Thursday.

Last year, this Drumpf appointee, had no problem extending everything until July. In 2021, it's piecemeal at best, and very little sympathy for those trying to meet the deadlines, while still in the middle of a pandemic. But the IRS commissioner dickhead doesn't care about that. He wants compassion in regards to the fact the IRS still has lots of 2019 Returns to process, but isn't willing to give any to tax filers or the preparers who put their Returns together.

[progree]

4. "much more difficult to do an Estimate for the coming year, until you've completed the prior year"

As if all of that wasn't enough, now Congress is still BEGGING for an extension to the 1st Qtr 2021 Estimate filing. Because the IRS, in all their wisdom, extended the Individual filing date, but left the 1st Qtr Estimates date as 4/15. So now I have clients e-mailing me in confusion. I should mention that it's much more difficult to do an Estimate for the coming year, until you've completed the prior year. So now, I have to go through and see which clients I need to essentially still complete in the next couple of days, so they can make their Estimates by Thursday.

I feel for you and your clients ... I'll have to decide how much Q1 estimated tax to pay real soon ... what's more, if one fucks up and pays too little (and one can't just make up too little in Q1 by paying more in Q2 and later), then TurboTax requires one to file a paper return for Minnesota state taxes.

For federal returns, if one "annualizes" to avoid the penalty (a huge chunk of my income is in Q4), one has to file a federal paper return -- at least that is what I experienced with TurboTax in the 2018 tax year.

And now the OP article tells me that filing a paper return, besides being a silly extra hassle, is going to tie them up in knots.

And I still have this crap hanging over my head -- I got a notice from the IRS in November falsely claiming that I didn't declare $10,000 of income -- and that I owe $2,900 in taxes (no I'm not in the 29% tax bracket... some secondary effects result in that oversized tax amount).

The IRS says I didn't report income that I reported 👀 😲😭💔
https://www.democraticunderground.com/11212509

I sent in proof that I had declared the supposedly missing piece of income -- In February I got a notice that they needed more time to investigate, sigh, and I'll hear within 90 days. Have heard nothing since, but 90 days doesn't run out until early May.

It really sucks having this hang over my head, and wondering if I'm going to end up in an endless back and forth as penalties and interest accumulate.

[SoCalDavidS]

6. Yeah, It's A Real Shitshow There

You would think they could show some compassion for the public, who are dealing with the same issues they are. But Nope. Everyone can fend for themselves. AND WE HAVE TO BE PATIENT WITH THEM, WHILE THEY DEMAND FULL COMPLIANCE FROM US!

I'd expect no less Arrogance from a Drumpf appointee. I believe his is like DeJoy, and there is nothing Joe can do about him.

[gab13by13]

3. I sent my taxes in the mail (paper)

on Feb. 6th. I keep going to "Where's my refund," and I get a big nothingburger. I usually pay extra to track my taxes but I didn't do that this year. So, hearing that the IRS is way behind is good news to me, at least my return is probably in a trailer. Better to have them owe me money than cheat me out of it.

[Backseat Driver]

5. It would so nice if you'd receive notice your return

had been accepted (mathematically) with or without payment or notice that a refund will soon be issued in accordance with process - with at least a human point of contact. Uncle Sam should maintain regular contact with taxpayers when there are return problems; that is entirely possible in this digital age rather than allow interest accruals several times the amount due for people already having difficulty paying bills for necessities of life.

Seems the IRS/Treasury figured out how to quickly notify Americans about stimulus funds; why not regular receipt of forms and funds to all parties per filing status. No app for that account(s), Solarwind hacking notwithstanding???? Oh yeah, and about those USPS folks who purposely slow down, steal, and just don't deliver important government notices? Geesh, one shouldn't have to contact a US Congress critter just to get one's mail!!!