The COVID 19 pandemic has created challenges for taxpayers, tax professionals and the IRS.  Members are facing another uphill tax filing season with IRS service levels reaching new lows.  To help   members, the MSCPA and AICPA are advocating for immediate tax relief.

       The IRS still has an unprecedented number of unprocessed returns in comparison to years before the pandemic.  As of December 23, 2021, the backlog included 6 million Forms 1040, 2.3 million amended Forms 1040, 2 million Forms 941, and nearly 500,000 amended Forms 941.  Additionally, the IRS is only answering 9 percent of all calls and only 3 percent of calls regarding individual income tax returns which prevents taxpayers from resolving straightforward issues.  Recognizing the extraordinary challenges of the pandemic, in addition to the IRS operating with antiquated technology and a constrained budget, the current situation is alarming and has deteriorated to a point that the Taxpayer Advocate Service (TAS) will no longer accept cases solely involving the processing of amended returns.  This has made it impossible for frustrated taxpayers and tax preparers to find any help.

       MSCPA reached out to our Congressional delegation asking each of them to sign on to House and Senate letters to the Secretary of Treasury requesting the IRS consider the following measures to bring immediate relief to taxpayers, and reduce the backlog, during this tax filing season:

• Halt automated collections from now until at least 90 days after April 18, 2022;

• Delay the collection process for filers until any active and pending penalty abatement requests have been processed;

• Streamline the reasonable cause penalty abatement process for taxpayers impacted by the COVID-19 pandemic without the need for written correspondence;

• Provide targeted tax penalty relief for taxpayers who paid at least 70 percent of the tax due for the 2020 and 2021 tax year, and

• Expedite processing of amended returns and provide TAS and Congressional caseworkers with timely responses.

       Within hours of Treasury receiving the bipartisan coalition letter of nearly 200 House members (including Representatives Palazzo and Thompson) and a Senate version of the letter signed by 25 Senators, the IRS announced on January 27 they will halt the use of automated notices in cases where a payment has been credited to a taxpayer but no tax return has been processed in an effort to help ease confusion related to a backlog in paper filings.  While this relief is very limited, at least the needle moved.    

        AICPA is also working with state societies in Congressional efforts, and to add several more layers to the profession’s ongoing advocacy work on relief, the AICPA has joined several other organizations in a coalition that adds even more voices to the importance of this issue.  The coalition also sent a letter to Treasury and the IRS requesting similar relief measures to reduce the need for taxpayers and tax professionals to communicate with the IRS due to the persistent and erroneous notices.   Joining AICPA in the coalition are Latino Tax Pro, National Association of Black Accountants (NABA), National Association of Enrolled Agents (NAEA), National Association of Tax Professionals (NATP), National Conference of CPA Practitioners (NCCPAP), National Society of Accountants (NSA), National Society of Black CPAs (NSBCPA), National Society of Tax Professionals (NSTP), Padgett Business Services, and Prosperity Now.  AICPA and state societies supported bipartisan legislation introduced in Congress in September 2021, The Taxpayer Penalty Protection Act of 2021, which would provide penalty relief.  However, penalty relief can be granted without legislation and is included in the Congressional letters requests.

       National Taxpayer Advocate’s 2021 Annual Report to Congress noted that the pandemic did not create new challenges for the IRS as much as it highlighted longstanding challenges and areas that require attention.  The main recommendation to Congress is to provide the IRS with additional funding to enable it to meet taxpayer needs and to conduct sufficient oversight to ensure the additional funding is well spent. The report outlines key recommendations that additional funding could support to improve the problems.  The full annual report can be found here:   https://www.taxpayeradvocate.irs.gov/reports/2021-annual-report-to-congress/.

       While IRS funding is needed, immediate tax relief for this tax filing season is urgent.  MSCPA and AICPA will continue to advocate to relieve these issues.  MSCPA is fortunate to have Jan Lewis, a past Chairman of the Board, working with us and on the national level in her position of AICPA Tax Executive Committee Chair to keep us informed and to spearhead efforts for taxpayers and tax professionals.