ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – THE GAO AUDITS THE IRS – “HOUSTON, WE HAVE A PROBLEM!”
By Robert S. Schriebman
The General Accounting Office (GAO) is the watchdog over the federal government. Periodically it publishes its findings on the efficiency or lack of it of a specific agency. The GAO recently took a look at the IRS’ efforts to address its current challenges. The audit found the IRS has many challenges. The GAO published its findings in GAO-22-105802 (February 17, 2022). During the annual tax filling season, the IRS processes more than 150 million business and individual tax returns. The IRS experienced multiple challenges during the 2021 filing season primarily due to an unprecedented workload that included delivering COVID-19 relief. The IRS has only so many employees. When the pandemic hit, the IRS was already short-staffed and looking to Congress for funds to hire more people at virtually all levels.
There is an old saying in Yiddish, “You cannot have your tuchas in 10 places at the same time.” This is precisely the problem faced by the IRS. The IRS began the 2021 filing season with a backlog of 8 million individual and business returns from prior tax seasons that had to be processed along with incoming returns. For the current filing season, the IRS will need to process the remaining returns from 2021 along with in coming returns for the 2022 season. The IRS also expects about 21 million returns to be stopped for errors associated with recent tax law changes.
The Current Challenges Facing the IRS
The current challenges facing the IRS in the 2021 filing season are many. For example, telephone demands skyrocketed. The IRS received 195 million calls during the 2021 filing season compared to 39 million in 2019. Correspondence inventory nearly tripled at the end of the 2021 filing season inventory was at 5.9 million compared to 2 million in 2019. Face-to-face taxpayer services declined dramatically in 2021 compared to 2019. The IRS saw only one half the number of taxpayers during 2021.
Trying to reach the IRS by telephone these days is an exercise in futility. A caller is greeted by a recorded message requesting the taxpayer call back after several months. The IRS also struggled to respond to taxpayer correspondence. The correspondence inventory grew to more than 8 million by the start of 2022, and the IRS expects this inventory to exceed 10 million by the end of fiscal year 2022 – more than triple the load as of the end of fiscal year 2020.
Congress has been putting pressure on the IRS and its Commissioner, to deal with the literally mountains of unopened correspondence. This correspondence runs the gamut from newly filed income tax and payroll tax returns, amended returns, claims for penalty relief, and claims for refunds.
IRS Commissioner Charles Rettig is in a tough spot. He is a very competent and caring person with a stellar record as a practicing tax attorney. He is keenly aware of the impact of the pandemic on both taxpayers and his limited staff. He has pulled people offline to address the backlog of correspondence. When I get concerned about the stack of unopen mail on my desk and the unreturned calls from yesterday, I thank my lucky stars I’m not the Commissioner.
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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