Tag Archives: accounting2020

35 Million Unprocessed Tax Returns Due To IRS Delays

The various pandemic-era programs introduced by the federal government have increased the tax authority’s workload and caused delays in the tax refund process.
The IRS has been under extreme pressure since the start of the pandemic, tasked with implementing a range of federal relief programs designed to support individuals, families and businesses affected by covid-19.
“The IRS and its employees deserve tremendous credit for what they have accomplished under very difficult circumstances, but there is always room for improvement.” Taxpayer Advocate Erin Collins wrote in her report. “This year, the IRS is dealing with an unprecedented number of returns requiring manual review, slowing the issuance of refunds,” Collins continued. “These processing backlogs matter greatly because most taxpayers overpay their tax during the year by way of wage withholding or estimated tax payments and are entitled to receive refunds when they file their returns. Moreover, the government uses the tax system to distribute other financial benefits.”
The 35 million pending returns account for 20 percent of the total returns submitted. And with the May 17 federal tax deadline almost two months in the past, the IRS is well beyond the 21-day processing time it typically strives for. Myriad reasons account for the delay.

The 2021 tax filing season started late and was extended an extra month due to the coronavirus pandemic. To make matters worse, the agency was inundated with phone calls and unable to keep up. During the 2021 filing period, the IRS received 167 million phone calls, four times more than during the 2019 season. As a result, only 9% of calls were answered by a live customer service representative.The popular “1040” line, the most frequently dialed IRS toll-free number, received 85 million calls during the 2021 filing season, with only 3% of callers reaching a live person.

Since the start of 2021, the IRS has issued the second and third economic impact payments, better known as stimulus checks. The second, for up to $600, started going out at the end of December 2020, as part of the Coronavirus Response and Relief Supplemental Appropriations Act. The third, for up to $1,400, started going out in the middle of March, as part of the American Rescue Plan Act. The IRS began accepting tax returns on February 12. So the latest check was processed during tax season, its busiest time of the year.

Another key component of the American Rescue Plan is the updated Child Tax Credit. Starting July 15, the IRS will pay $3,600 per child to parents of children up to age five. Half will come as six monthly payments, and half as a 2021 tax credit. That comes out to $300 per month and another $1,800 at tax time. The total amount changes to $3,000 per child for parents of six to 17 year olds, or $250 per month and $1,500 at tax time. The IRS has also been standing up this new program of monthly Child Tax Credit payments during tax season. While the agency has now sent out three stimulus checks, it has no experience sending out millions of periodic payments. Resources dedicated to setting up this program are resources not dedicated to its core mission, which is to “provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.”

Erin Collins’s report also cites limited resources and technology issues as reasons for delays in processing tax returns. The agency operated under many of the same limitations that have affected office workers the world over during the pandemic. That included remote work, which can affect efficiency. The IRS is also understaffed and underfunded. Congress has continually reduced the agency’s budget over the last decade. Funding and total employment are both down by about 20 percent.

Beginning the tax season at a disadvantage contributed to the 35 million-return backlog. Tasking the IRS with stimulus checks and the updated Child Tax Credit at the same time drew resources away from processing tax returns. And a history of understaffing and underfunding set them up for failure. All of this put a strain on Americans who were counting on timely refunds.

SVOG application portal reopens today at 12pm ET

The U.S. Small Business Administration, citing negative feedback to previously announced plans to reopen the Shuttered Venue Operators Grant (SVOG) application portal on Saturday, announced Friday night that it was rescheduling the reopening for today at noon EDT.

“We heard you and we are taking action,” the SBA said in an emailed statement. “It is our top priority to deliver on the promise and commitment to provide economic lifelines to you ASAP. Yet, we understand the challenges a weekend opening would bring and to ensure the greatest number of businesses can apply for these funds, we decided to reschedule.”

The Friday announcement came less than 24 hours after the SBA had announced the Saturday reopening. In a brief statement issued late Thursday night, the agency said it had completed rigorous testing on the portal, which was forced to shut down due to technical issues only hours after it opened on April 8. The SBA also provided updated documents and guidance Friday. The agency said that interested applicants should register for an account in advance through the portal.

In addition, the SBA released updated FAQ guidance related to the SVOG program. The FAQs are reorganized for clarity, and content that is new or substantially changed is marked with an asterisk. Among the new information included is a Question 31 in the Application section that provides a sample statement that applicants can use for their Certification of Need. Also, a clarification in Question 11 in the Revenue section indicates that the SBA will look to the entity’s calendar year 2019 earned revenues as the basis for determining the award amount.

The application portal for the SVOG program ran into technical difficulties almost immediately on April 8, with venue owners and other eligible businesses saying on social media that they could not upload supporting documents for their applications. The SBA then shut down the portal for repairs.

The SBA said last week that its vendors had fixed the root cause of the initial problems but that more in-depth risk analysis and stress tests identified other issues.

Here is what you need to do:

WHERE IS MY FEDERAL TAX REFUND

April 21, 2021
Dear Clients, Business Associates and Friends:
Typically the IRS processes electronic returns and pays out the tax refund within 21 days of receipt.
However, the high volume of 2020 tax returns being filed daily, the backlog of 2019 paper tax returns, IRS resource issues, and IRS technology problems are causing delays in issuing the tax refunds. This is due, in part, to the IRS’s need to manually verify the large number of Refund Recovery Credits, as well as the Earned Income Tax Credit, Advanced Child Tax Credit and 2019 adjusted income lookback claims.
Currently, the vast majority of processing delays are a result from tax returns that are not loaded onto the IRS system or are in “suspense” status awaiting IRS action. As of March 25, 2021, over 6 million electronic returns have been “suspended” due to issues requiring manual processing or return inconsistencies. Until the returns are loaded into the IRS system, the IRS cannot see or access the return information so if you call them, they cannot provide any further insight on the status of your tax return.
The Taxpayer Advocate Service is working with the IRS to identify how taxpayers can use the Where’s MY Refund website to determine the status of their return.
In conclusion, until the IRS resolves all of the issues stated, taxpayers just need to sit back and wait for their refunds as there is nothing else that can be done by WZ or the taxpayer, to accelerate the refund process.