here are just the first five.
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america’s taxpayer advocate service—an independent watchdog agency within the irs—has identified the ten most serious problems at the irs.
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by “problems,” the tas means the difference between what taxpayers want and what the irs delivers. unfortunately, tax preparers trying to bridge the gap between the two often end up taking grief for failing to do the impossible.
understanding the problems at the irs end can help practitioners explain the situation. here are the top five:
1 – processing and refund delays
surprisingly, 73 percent of taxpayers trust the irs to fairly enforce tax laws. and that, indeed, is the tax collector’s intent. but with the service receiving only two-thirds of the funding it needs to do its job, it’s amazing anybody gets refunds within their lifetime.
at the close of the 2021 filing season, the irs had a backlog of over 35 million returns. by the end of the year, it still had millions yet to do. in 2021, tas cases regarding processing issues were up 189 percent over the previous year. cases regarding amended returns were up 173 percent.
2 – irs recruitment, hiring, and training
though 69 percent of taxpayers trust the irs to help them understand tax obligations, many are sorely disappointed. why?
the irs workforce is aging and retiring just as the irs budget keeps dropping. though the irs brings in 95 cents for every dollar in gross revenue to the federal government, its budget has been cut by an inflation-adjusted 20 percent over the past decade. consequently, the 2010 staff of 94,711 has dwindled to 78,661 even as the u.s. population and their tax returns have increased. in 2021, 14,500 staff retired or quit, but only 12,500 were hired. the 2,000 who aren’t there are probably the ones who didn’t take care of your griping clients’ returns.
3 – telephone and in-person service
many taxpayers have yet to read all 2,652 pages of the u.s. tax code, maybe because they were reading the harry potter series, which is just as long and every bit as full of magic and mystery.
so who do taxpayers call for help? the irs—last year, 282 million times. but the service answered only 32 million times, leaving nine out of ten callers to die on hold. maybe it’s because all the agents were reading the harry potter series, or maybe because of problem #2.
there’s a fine line between frustration and fury. a toll-free number, preferred by 86 percent, might help hold that line, especially if somebody answered it. almost as many—76 percent—think a local irs office location might be nice. seventy-one percent wouldn’t mind a community-based tax clinic.
4 – transparency and clarity
fifty percent of taxpayers have a nifty idea: irs tax sources on social media. and why not a blog or two? current irs tools and apps are failing to provide the details taxpayers are searching for. one of those details is “where’s my [expletive deleted] refund?”, which is supposed to be answered by the app called “where’s my refund” but way too often isn’t.
one slightly enlightening answer might be “it’s in the error resolution system inventory along with 10.3 million other returns,” which is how many were unresolved at the end of the filing season last year, a 544 percent increase over 2020.
5 – filing season delays
your clients can get fined for filing 2021 returns after april 15 by the same agency that is still working on 2020 returns filed last year.
tell your clients that the irs is not to blame. the fault lies with congress, which has left the irs short-staffed and working with computers that date back to the bronze age running software of paleolithic vintage. when clients get tired of waiting for the irs to answer the phone, tell them to call their congressional rep.
to be continued…
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