FOCUSES ON TAXPAYER IMPACT OF COVID-19 AND IRS FUNDING NEEDS

The IRS announced (IR-2021-11) the release of the National Taxpayer Advocate’s 2020 report to Congress which
focused on pandemic related challenges taxpayers faced as well as the 20% IRS budget reduction since fiscal year 2010
that has left the IRS short staffed and with old technology.
The report says the IRS in most cases “can effectively handle whatever it can automate,” and as a result, most taxpayers
were well served. As of Nov 20, 2020, the IRS had received about 169 million individual income tax returns, including
8.4 million that were filed solely to claim stimulus payments. (boy, didn’t we feel that?) About 90% of returns were e-
filed and were not delayed by the pandemic. The report stated that millions of taxpayers experienced major problems,
including the following:
1. Refund delays due to COVID-19 processing backlogs. About 16 million individual returns were paper filed. Since the
IRS could not fully staff its mail facilities, some taxpayers have waited six months or longer for the IRS to process their
returns.
2. Refund delays due to IRS fraud detection filters. The IRS passes all returns claiming refunds through a series of filters
designed to detect fraudulent income or identity theft-based claims.
3. EIP underpayments. Millions of eligible individuals did not receive some or all of their EIPs for which they were
eligible even though the IRS received a statutory directive to issue payments as rapidly as possible.
4. Late notices. Taxpayers were sent more than 20 million notices with dates that had passed and response and payment
deadlines that had also passed.
5. Lack of information about backlogs, notices, and other problems. Erin M. Collins report says the IRS should have
done a better job of keeping the public informed about COVID-19 related delays by creating a regularly updated
“COVID-19 Dashboard” and issuing weekly news releases to ensure the information was widely disseminated.
The National Taxpayer Advocate is required to identify the ten most serious problems encountered by taxpayers in their
dealings with the IRS. I am sure we can list all ten ourselves, but the following are the most serious problems the IRS is
having:
1. Insufficient employee hiring and retention. Since FY2010 the IRS workforce has shrunk by approximately 20%.
2. Inadequate telephone and in-person taxpayer service. In FY2020, the IRS received more than 100 million calls on its
toll-free line. IRS employees answered about 24 million. The average hold time is 18 minutes.
3. Limited functionality of online taxpayer accounts.
4. Old Information technology.