It is unfortunate that we are a couple weeks into the current tax season and still must talk about how the IRS is handling the last one. The numbers vary a bit depending on where you look, but the truth is that the IRS is still dealing with a significant amount of tax returns (and other issues) from 2020. There are various reasons for this, the most obvious being the nature of the pandemic, so we can understand how it happened. At the same time, however, it is also easy to understand how this is frustrating for those dealing with the situation’s ramifications.
For one, this is hopefully something you have not had to deal with often but getting the IRS on the phone is never a fun task. Take our word for it that doing this over the last year has been an even less fun task than usual.
Another effect that you have a better chance of having seen, though, is the number of notices the IRS has sent out that it did not have to. For example, people are seeing collection notices for taxes from a return that the IRS has received but not yet processed. Thankfully over the past week, the IRS has stopped sending many of these until it catches up on its backlog.
Most of the time, we file our taxes, and assume it is just taken care of. To then get these notices for something you thought was taken care of, and then taking the work (and more of it than usual) to determine that your return was received but just not processed, adds to the frustration.
Of course, this backlog of unprocessed returns means that some people are still waiting to receive refunds, too. And we are about to the point where this wait could be going on for about a year. That is quite a holdup for money due to you.
The IRS has said that it is shifting some employees around in an effort to play catch-up. This is great, but at the same time, so many people can only do so much work, and if it has gone on this long already, it is not going to be magically solved in a week.
So the purpose of my writing here is twofold. First, if you are still waiting on resolution from filing last year, know you are not alone. This is a real problem the agency is dealing with and is taking action to see that progress is made. Second, when it comes to filing this year, it will be beneficial to have everything in order as soon as possible to ease your way into the current year’s pipeline of returns.
And as always, if you have questions about any of these situations, we will be happy to help you address them.
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To ensure we don't make the folks at the IRS ornery, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.