ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – WHAT’S NEW AT THE IRS – MARCH 2022?
By Robert S. Schriebman
The IRS as well as Commissioner Rettig has issued a series of announcements and press releases concerning the following areas:
- The mountain of unopened documentation
- Why tax refunds from electronically filed returns are taking so long.
- Refunds awaiting those who have not filed 2018 returns
- Manpower shortages in the Criminal Investigation Division (CID).
This article will discuss these topics.
The Mountain of Unopened Documentation
Congress has been unhappy with the many truckloads of unopened tax returns and other correspondence waiting at IRS Service Centers. There has been pressure on the Commissioner to shift workers to address this situation.
Commissioner Rettig announced, on March 17, 2022, that the huge mountain of backlogged tax returns and other correspondence should be at normal levels by the end of 2022. The Commissioner envisions that the 2023 tax-filing season will be at normal inventories. The statement was made before members of the House Ways and Means Oversight Subcommittee. The Commissioner pointed out that there is a team of 800 experienced IRS employees assigned to handle account management and another 700 employees coming in to deal with submission processing.
The IRS remains at a grossly underfunded worker status. While there has been a $675 million increase over previous budgets, the Commissioner pointed out that it is still $500 million less than he requested.
Why Tax Refunds from Electronically Filed Returns Are Taking So Long
On March 24, 2022, the IRS issued IR-2022-65 dealing with the backlog of tax returns resulting from returns being electronically filed. The IRS’ goal is to issue most refunds in less than 21 days for taxpayers who file electronically. These refunds are now taking longer. Many different factors are affecting this time delay. Some electronically filed returns require manual reviews for errors. According to the IR-2022-65, returns need corrections for credits such as The Child Tax Credit, Recovery Rebate Credit, Earned Income Tax Credit, and the Additional Child Tax Credit.
A credit differs from a deduction. A deduction reduces tax exposure but only by the taxpayer’s tax bracket. A credit, on the other hand, is a dollar-for-dollar return.
To check the status of a refund, taxpayers should use the Where’s My Refund? tool on IRS.gov.
Refunds Awaiting Those Who Have Not Filed 2018 Returns
There are $1.5 billion in tax refunds waiting for an estimated 1.5 million taxpayers who have not yet filed their 2018 1040 federal income tax return. Even if the return is filed, the IRS may still hold the refund if the taxpayer has not filed either the 2019 or 2020 return. Tax refunds may be applied on any amounts still owed to the IRS, or a State Tax Agency. For more information, see IR-2022-66.
Manpower Shortages in the Criminal Investigation Division (CID)
Perhaps no agency in America is more feared than the IRS’ CID. This agency not only investigates potential domestic tax fraud, but it also investigates illicit money laundering and cybercurrency transactions. The CID is also investigation the activities of Russian billionaires and Russian-based entities such as banks. General tax fraud investigations are at the core of CID activities. For example, agents expand substantial energy unpacking domestic and offshore tax avoidance schemes that are facilitated through complex trusts and partnerships arrangements. They are also involved in non-tax related fraud cases. In IRS Fact Sheet FS-2022-18, the IRS sets forth its current activities relating to tax evasion charges against a Russian bank founder, $1.3 billion tax shelter schemes, and $3.6 billion of stolen cryptocurrency seized in 2021.
Given its size and growing responsibilities, the IRS CID lacks the resources it needs to fully support these efforts. Since 2010, the overall IRS budget has fallen by nearly 20%. Since 2010, the number of CID employees has fallen by approximately 25% from about 4,000 workers in 2010 to under 3,000 today. The goal of the Fact Sheet is to project that the CID hopes to be at full-man power strength by the 2027 fiscal year.
Only an informed public can make accurate and intelligent decisions. My goal is to keep you informed as I become informed.
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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