Here We Go Again (IRS Edition)

• January 25, 2022
• Carey M. Heyman, CPA

Each year as required by the Internal Revenue Code, the National Taxpayer Advocate submits its annual report to the House Committee on Ways and Means and the Senate Committee on Finance. Erin Collins of the Taxpayer Advocate Service reported that the IRS had a backlog of over 35 million tax returns at the end of the 2021 filing season and millions of unprocessed tax returns and amended tax returns as of year-end. Budget cuts, an aging workforce, insufficient hiring practices, and the tall task of administering several COVID-19 pandemic financial relief programs, including three rounds of stimulus payments, have been named as the primary reasons for the IRS’ continued struggles.

“I don’t know where I’m goin’. But I sure know where I’ve been. Hanging on the promises in songs of yesterday. An’ I’ve made up my mind, I ain’t wasting no more time. Here I go again, here I go again. “

Whitesnake’s 1982 classic “Here I Go Again” from the album “Saints An’ Sinners”

The National Taxpayer Advocate’s annual report determined the ten most egregious problems encountered by taxpayers (either directly or indirectly):

1. Processing and refund delays.
2. Inadequate staff, due to poor recruitment, hiring, and training by the IRS.
3. Insufficient telephone and in-person taxpayer service.
4. Lack of transparency and clarity.
5. Filing season delays.
6. Limitations of online taxpayer accounts.
7. Limitations in digital taxpayer communications, including email.
8. Barriers to electronic filing.
9. Correspondence backlogs and audits.
10. Disparate impact of collection policies on low-income taxpayers.

The National Taxpayer Advocate also compiled 68 legislative recommendations to Congress in what is dubbed the 2022 “Purple Book.” Some of the more noteworthy recommendations included:

• Strengthen taxpayer rights and taxpayer service, including sufficient funding to improve the taxpayer experience and to modernize the IRS’ information technology systems.
• Improve the filing process. Utilize scanning technology and reduce barriers to electronic filing.
• Improve assessment and collection procedures.
• Reform penalty and interest provisions.
• Strengthen taxpayer rights before the Office of Appeals.
• Strengthen the Office of the Taxpayer Advocate.
• Expand the U.S. Tax Court’s jurisdiction to hear refund cases.

Last year, President Biden proposed an increase in funding to the IRS by $80 billion over the next 10 years. That number was reduced to $44 billion as the Build Back Better proposal moved its way through Congress. But, we know where those discussions ultimately went. And at least for the foreseeable future, the IRS will remain “just another heart in need of rescue.”

Source: IRS.gov, Taxpayer Advocate Service

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