We’re frustrated, our clients are frustrated and most of America is frustrated. The IRS isn’t responding to written correspondence from taxpayers or tax professionals in a timely manner or answering their phones. Mailings continue to pile up or remain unanswered because of COVID and social distancing restrictions.
IRS’s response time is far greater than its targeted 30 to 45 day goal. To make matters worse, it’s continuing to send out automated notices, sowing confusion among taxpayers. Some people who sent in documents in response to an IRS letter are getting erroneous notices from the agency, some of which even assess penalties for failure to timely respond. Other taxpayers who requested penalty abatement or other tax relief in writing now find themselves embroiled in IRS’s automated collection process, through no fault of their own.
The Service is offering very narrow relief. It is suspending some notices, but only in cases in which it has credited taxpayers’ accounts for payments sent in but there is no record of a 2020 return being filed. IRS recognizes that these people likely filed paper 1040s by mail, and those filings have not yet been processed.
But lawmakers, preparers and taxpayer advocacy groups want more. A coalition of tax preparer organizations is asking IRS to provide limited relief from the underpayment penalty, temporarily cease automated compliance actions, and put collection holds on accounts of taxpayers who request penalty relief, among other things. Approximately 200 House Democrats and Republicans echo these recommendations and are putting pressure on the Service to act fast.
So, for the first time in a long time, we don’t have answers for you beyond that explanation. Our hands are tied and we’re waiting with you for something to budge. Meanwhile, we’ll be in the fray sharing whatever information and advice we can to keep you up-to-date and informed.