Summary of June Report for 2021 Tax Season
Every year, the Taxpayer Advocate Service submits a mid-year report to Congress outlining serious problems facing taxpayers and recommending how to mitigate those issues. As an independent organization within the IRS, the Taxpayer Advocate Service ensures that every taxpayer is treated fairly, helps resolve taxpayers’ issues and recommends changes that will prevent problems going forward for the next tax season. The overarching idea is that the IRS can apply the lessons learned from past years to improve future operations.
Crushing Blacklog
Erin M. Collins released her mandated mid-year report to Congress on June 22 and the most glaring issue is the IRS backlogged inventory that is crushing their employees and taxpayers. With millions of taxpayers waiting six months or more to receive funds, the backlog of paperwork is growing. The documents are adding up with 21 million paper returns (including 8.2 million paper forms 1040) awaiting processing. On the bright side, for most taxpayers who were e-filed, the 2022 tax season went much smoother. It is estimated that 85% of individual taxpayers who e-filed have either received their refunds or paid any balance without issue.
A Year like NO Other
The report also touched on the fact that the 2021 filing season was like no other. Individuals and businesses across the nation were forced to confront ongoing medical and financial challenges. During the past year, more than 170 million individuals and millions of businesses received financial assistance through three rounds of stimulus payments, Paycheck Protection Program loans and Employee retention credits. Due to this added layer of reporting, the IRS is dealing with an unprecedented amount of returns (35 million to be exact) requiring manual review.
No One to Answer
The IRS also had a historically high number of telephone calls during the 2021 filing season. At the height of the filing season, the IRS received telephone calls at the rate of 1,500 per second! That averages out to only 7% of taxpayer calls reaching a telephone assistor. Needless to say, there were not enough employees to answer the overwhelming amount of phone calls and taxpayer questions.
Proactive Steps
The 2021 tax season exposed weaknesses and vulnerabilities in the processes set by the IRS. However, with each season comes the ability to experiment with new approaches to the problems. The mid-year report recommended the following proactive measures to help improve communication between the IRS and its customers:
- Prioritize the development of accessible and robust online accounts
- Expand customer callback technology to all IRS toll-free telephone lines
- Reduce barriers to e-filing tax returns
- Utilize scanning technology for individual income tax returns prepared electronically but submitted on paper
- Expand digital acceptance and transmission of documents and digital signatures
- Offer video conferencing options for taxpayers
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