Seems like we are headed for another troubling tax season. The IRS is still playing catch-up. There are backlogs in processing returns and refunds, and even tax notices. This backlog has led to some taxpayers receiving erroneous collection letters.
As you may have experienced yourself, getting through to the IRS by phone is a test of patience. Our office has received calls from our clients voicing their issues. We try to help and direct you the best we can, but many times we are unable to help. Unfortunately, we do not have a magic phone number either. The one suggestion we can offer, contact your local elected official's office. They do have better connections.
What caused or at least added to the confusion were the large, complicated, tax relief packages instituted by the federal government. The child tax credit was expanded, the American Rescue Plan was enacted in March 2021, and immediately after, the third round of economic stimulus payments of $1,400 per individual was distributed (for single filers earning less than $75,000 and joint filers earning less than $150,000). In addition to all of the above, the IRS staff also suffered pandemic related health issues. This all affected the workload for IRS personnel.
Many filers did not recall receiving or did not remember how much they received in tax incentives. This was picked up in the IRS systems as an error on their 1040 forms. That is bound to be an issue again this year, as we may have forgotten the check we received in March of 2021. To try to avoid this mistake, start checking your bank statements from March 2021 for a direct deposit to your personal account; you can also access a record of this payment online at the IRS web site: https://www.irs.gov/coronavirus/economic-impact-payments
You should have received a letter from the IRS documenting the payment you received in 2021.
If Congress passes President Biden’s Build Back Better plan, the IRS workload will be increased. This will, in turn, cause more headaches for taxpayers. The plan will provide funds to increase the IRS budget. But in the opinion of Garrett Wilson, a senior policy analyst with the Tax Foundation, an independent Washington, D.C. Think Tank, “Policymakers should further avoid complicating the tax code and instead aim for simplification so taxpayers can better understand and comply with the tax code and the IRS can passably perform its core mission of tax collection.”
Until then, we taxpayers must muddle along within the existing framework of the US Tax Code.
YOU HAVE BEEN FOREWARNED!