25 Million (and Counting)

Today is April Fool’s Day.  I wish this post were a joke–and I guess in one way it is.  Unfortunately, what I’m reporting is true.

Yesterday, National Taxpayer Advocate Erin Collins told a webinar that 25 million tax returns need a human to process.  Some returns must be filed on paper (for example, split-interest trust returns, Form 5227), other returns fall out of processing due to errors in processing, and some taxpayers choose to file paper returns.  The IRS Covid operations page says there are 9.2 million returns as of March 15th needing to be processed–some received as far back as July 2020.  Most likely, Ms. Collins’s remarks mean another 16 million returns fell out of processing and are awaiting a human to push them through the system.

What does this mean?  If you have to paper-file something with the IRS, or if you file an amended return with the IRS (all amended returns are reviewed by a human), you should expect it to take many months–maybe a year–to be processed.  If you file your return electronically, there’s about a 90% chance it will be processed just fine.  However, if your return is one of the 10% or so that falls out of processing, your return could sit in a virtual stack for months.  What’s worse is there is nothing you can do about this. 

The reality is that until IRS operations fully resume at their Service Centers (I expect that to happen late this summer), the backlogs will only grow.  Commissioner Rettig’s remarks that (paraphrasing) things are fine are disingenuous at best and outright lies at worst.  The IRS remains broken, and we’re all suffering as a result.

 

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