IRS Backlog Update

[Lee B]

"When the Advocate’s report went to press in mid-December 2022, the IRS had reduced those backlogs to 1 million original individual returns, 1.5 million original business returns, and 1.5 million amended returns. By Dec. 23, the IRS had further reduced its unprocessed paper backlog of original individual returns to about 400,000 and original business returns to about 1 million."

According to Nina Olson, the former Taxpayer Advocate, the overall situation isn't quite as positive because there are Millions

more returns in Suspense waiting for a live person to resolve processing problems.

[Catherine]

See, it's better!  No, don't look under that tablecloth; nothing to see there! 

[Lee B]

I responded to a CP 2000 13 months ago. I have received 2 letters from the IRS saying they needed more time. Still waiting.

Another accountant here in Oregon mailed a reply back in May 2021. Her correspondence was opened and recorded in November 2021.

So far she has received 4 letters from the IRS saying they needed more time. Don't even know what to say.

[Patrick Michael]

Have a client that filed an amended return in April of 2021 (for 21 return).  Checked on the status today at "Check on Status of my amended return" and it said client "Must take action" and call a number.  No notification to client that they had to call.  Wonder how long the IRS has been waiting for a call.

[Sara EA]

The same thing happened to a few of my clients.  No letters, nothing, just that notice on the website, like taxpayers are in the habit of checking irs.gov everyday like they check the weather.  One client got an amended W2 in July 2021 for tax year 2018 that showed huge increases in income and withholding.  There was a big IRS refund due, which still hadn't come after 18 months.  I assumed the return was in the paper backlog in that cafeteria.  (The amendment had to be paper filed because of the three year limit.)  It turned out that the IRS had issued the refund but the state took it.  The state recorded the higher income but not the higher withholding.  Still working that out.  Moral:  It's not always the IRS's fault.

[Lee B]

If the IRS issued the refund how did the state take it?

[Slippery Pencil]

April 2021, client filed her 2020 1040.

August 2021, client receives CP10 stating irs changed return and overpayment applied to 2021 was reduced from $14K to $7K.  Other than a vague statement about charitable contributions, the CP10 doesn't state what the changes were or why changes were made.  No calculations of the changes were included with the notice.  If I recalculate her return limiting charitable contributions to 60% of her AGI instead of the 100% allowed by the CARES act, I get close to the numbers on the CP10.

August 2021, I write the irs asking for details as to what they changed on the return and why.  I also stated the limit on charitable deduction was calculated correctly according to the CARES act and included the limitation worksheet that was also included with the original return.

So far, the client has received 4 letters stating the irs needs 60 more days to reply to our inquiry.  So last week I got a POA from her and called the irs.  Got through fairly easily but the agent disconnected me after getting the POA off the fax machine.  Called back, again getting through fairly easily and again getting disconnected about 10 minutes after the agent put me on hold to get the POA off the fax machine.  Called a third time.  Got through fairly easily.  Agent asked if I had POA.  Told her I've faxed it twice today but the agents disconnected me.  She states, "we're having a problem where the phone system disconnects everyone we put on hold".  I respond, "have you considered not putting people on hold?" while refraining from telling her what I really think and wondering why it would take until 3pm to figure out you have this problem.

An hour on the phone with the lady and I can't get her to agree that if the irs changed a return, then it's ridiculous that the irs needs any time, much less 16 months, to tell the taxpayer what the changes were and why the return was changed.  She has no way to figure out what the changes were but tells me, "it looks like a letter went out yesterday requesting 60 more days to investigate the matter and you need to wait to receive a response". 

 

[Yardley CPA]

4 hours ago, Slippery Pencil said:

 

An hour on the phone with the lady and I can't get her to agree that if the irs changed a return, then it's ridiculous that the irs needs any time, much less 16 months, to tell the taxpayer what the changes were and why the return was changed.  She has no way to figure out what the changes were but tells me, "it looks like a letter went out yesterday requesting 60 more days to investigate the matter and you need to wait to receive a response". 

 

I'm sure you're not surprised.  

[Sara EA]

On 1/16/2023 at 9:43 PM, cbslee said:

If the IRS issued the refund how did the state take it?

All states connect with IRS for amounts owed to them (and IRS connects with the states).  Thus if there is a refund from one but unpaid tax with the other, the refund goes to the overdue payment.  In my client's case, the state had recorded the higher income from the amended return but not the higher withholding, told the IRS but not the client that money was due, and the IRS refund was diverted to the state.

[Lee B]

52 minutes ago, Sara EA said:

All states connect with IRS for amounts owed to them (and IRS connects with the states).  Thus if there is a refund from one but unpaid tax with the other, the refund goes to the overdue payment.  In my client's case, the state had recorded the higher income from the amended return but not the higher withholding, told the IRS but not the client that money was due, and the IRS refund was diverted to the state.

Thanks, I didn't know that. It's been quite a few years since I had a client that didn't stay current with their tax payments.

[Lion EA]

A client could owe back child support which the state would capture from an IRS or state refund, also. I'm sure there are other things.

[Sara EA]

A taxpayer with an installment agreement will also have a state refund sent to IRS to apply to the balance.