Ask The California Employment Tax And Payroll Tax Attorney – The IRS Is Destroying Documents Amid Backlog
By Robert S. Schriebman
2022
Introduction
Are you having trouble obtaining copies of paper-filed returns and other documents from the IRS? It could be that the IRS has deliberately destroyed your documents. Why? Because they have a huge backlog of unopened documentation – mountains and mountains!
A recent report by the Treasury Inspector General for Tax Administration (IG) has reported that the IRS had destroyed some 30 million paper-filed documents in 2021. This was no accident. This was cold management decision to destroy an estimated 30 million paper-filed information return documents in March 2021. The IG report was dated May 4, 2022 and states, “The IRS uses these documents to conduct post-processing compliance matches such as the IRS’s Automated Underreporter Program to identify taxpayers not accurately reporting their income.”
The IG report goes on to state that 99% of the returns destroyed were documents submitted to the IRS by third party payors and not taxpayers. The remaining 1% of the destroyed documents were caused by software limitations.
The IRS claims that there were no negative taxpayer consequences as the result of this action. Further, the IRS has promised that no taxpayer will be penalized as the result of the destruction.
The IRS told the IG that they want more taxpayers to file returns electronically and that the cost for electronic processing is relatively small when compared to paper-processing. For example, to process a 1040 return, costs only 36 cents when filed electronically but the cost increases to over $15 for a paper-filed return. Most of the cost comes from the filing of paper payroll tax returns.
I found the IG report disturbing in that the IRS could not be pinned down on exactly what returns and documents were destroyed. It is clear that the future will demand more electronic filings than paper filings.
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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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