The IRS has experienced many challenges due to the pandemic. Due to the Covid the IRS had shut down 511 facilities in less than two weeks and 80,000 employees were sent home. Some departments were closed for months and IRS personnel has also spent valuable time on sending the stimulus payments and answering people’s questions about the stimulus. All of this has had a major impact on IRS operations and its ability to process tax returns. At one point the IRS had over 12 million pieces of mail in storage that hadn’t been processed. The IRS is diligently trying to get caught up on the backlog.
IRS Commissioner Charles Rettig said that millions of Americans whose tax returns have been caught in the processing backlog created by the pandemic, should receive their refunds in the coming months.”We would hope to be through this backlog by the summer,” Rettig told House Ways and Means Oversight Subcommittee Chairman Bill Pascrell, who said some 12 million returns are trapped in the IRS logjam, although Rettig says just 2.4 million were returns of individual Americans.
“I will tell you, my employees will work as hard as we can possibly work,” Rettig promised lawmakers, noting that he “sent 80,000 employees home. I shut down 511 facilities in less than two weeks,” because of pandemic concerns.
The IRS has been praised by many leaders for extending the April 15 tax deadline until May 17.
Due to a recent announcement concerning unemployment insurance, the IRS will now be required to make adjustments to many of the tax returns which have already been filed this year. People who may have already filed their returns this year and make under $150,000 in unemployment insurance compensation through August, thereby qualifying them for the $10,200 tax-free income benefit.
The initial guidance said that taxpayers would count unemployment benefits as part of their 2020 income when determining if they qualify for the tax break. The federal agency said in the most recent guidance that workers can exclude jobless benefits from their calculation of modified adjusted gross income, the official barometer for eligibility. This rule change means more people will be eligible for the exemption.
“Let me give you the certainty right now. The people who have filed should absolutely not file an amended return. So, whether they reported it or did not report it — do not file an amended return this time. We believe we’re sensitive to the situation that people are in. We believe that we will be able to handle this on our own. We believe that we will be able to automatically issue refunds associated with the $10,200,” Rettig said.
If you have mailed your tax returns in the past, efiling will vastly increase the speed in which your return is processed and help the IRS overcome their logjam. If you have a tax liability, efiling will provide proof that your return was filed on time instead of having to send your return by certified mail.
David Zubler is a tax accountant and Enrolled Agent in East Tennessee, providing tax strategies and representing clients before the IRS and has over 25 years of tax experience. He is the author of four tax books and is the founder and president of Your Tax Care. The company provides business and tax education to the public at its website, YourTaxCare.com. David can be reached at 865-363-3019 or contacted by email at firstname.lastname@example.org.