The Internal Revenue Service is working through a huge backlog of returns and correspondence.
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Tax refund delays, collection notices with past due dates, and missing stimulus payments are some of the issues taxpayers are facing due to the impact of the coronavirus pandemic on IRS operations, according to The National Taxpayer Advocate’s mid-year report to Congress. “Despite the IRS’s best efforts, there have been notable adverse taxpayer impacts,” the Taxpayer Advocate Services report says.
After praising the IRS for quickly disbursing 160 million CARES Act stimulus payments to individual taxpayers, and for extending the normal April and June tax deadlines until July 15, National Taxpayer Advocate Erin M. Collins enumerates the ways that the IRS has failed taxpayers during the Covid-19 pandemic. Here are some of the problem areas that might affect you, and how the Taxpayer Advocate Service is urging the Internal Revenue Service to step up.
Where’s my economic income payment? The IRS’s position is that most taxpayers who didn’t get some or all of their CARES Act stimulus payment have to wait until next year when they file their 2020 tax return to claim it. The Taxpayer Advocate is urging the IRS to provide full payments to taxpayers in 2020 “as rapidly as possible.”
Where’s my 2019 refund? If you filed a 2019 paper return and are due a refund, you may be in for a long wait, according to the TAS report. The IRS suspended processing of paper returns, and as of May 16, there was a backlog of 4.7 million paper returns.
If your return was flagged (by processing filters) and you sent in additional documentation to substantiate your claim, expect “lengthy delays” as the IRS hasn’t opened or processed many taxpayers’ responses. This is especially a problem for folks who claimed the earned income tax credit or the additional child tax credit.
Help! I just got a collection notice and it’s overdue! The IRS is sending out 20 million backlogged collection notices that weren’t mailed between April 8 and May 31. Look for “inserts” along with the main notice that explain that the response deadlines have been postponed. Yes, you still need to follow through. Make sure you answer by the new deadline.
The report notes that it’s unfair to compare this tax season with prior years. So far, the story this year is one of delayed service: Due to campus and office closures starting March 20, the IRS couldn’t staff customer service phone lines or provide face-to-face service, the report says. And there is an estimated 10 million pieces of mail—tax returns and correspondence—in trailers on IRS campuses; the IRS has sent out a “very limited” volume of outgoing taxpayer correspondence.
The good news is that the IRS has begun reopening: As IRS Employees Return To Work, Here’s What To Expect.