Trying to minimize aggravation during a tax-filing season that could have plenty of challenges, the Internal Revenue Service said it is pausing one of its notices that could ferment taxpayer frustrations.
That’s a good first step, tax-practitioner organizations say — but there’s more the IRS can do to help lower taxpayers’ blood pressure.
The IRS said Thursday it is suspending the notices it churns out when the agency’s systems show a person paid a balance due, but there’s no record showing the income-tax return has been filed.
Chances are the IRS has the return in paper form, but the tax collector still hasn’t processed it, the backlogged agency said in a statement. “Stopping these letters — which could have otherwise been sent to thousands of taxpayers — will help avoid confusion,” it said.
As of late December, the IRS was coping with a backlog of 6 million unprocessed tax returns, more than 2 million unprocessed amended returns and 5 million pieces of taxpayer correspondence, according to Erin Collins, the IRS’ National Taxpayer Advocate.
U.S. senators and a coalition of tax-preparer organizations say the IRS has various tools it can use now to smooth a bumpy filing season. That includes a pause for the coming months on all automated collection and compliance notices.
However, the IRS said Thursday that in many instances, it has no choice and is legally required to send the notices — that is, unless Congress makes changes. “We will continue to explore areas where the IRS can make changes and are in the process of reviewing the full set of notices that we send to determine where we can make adjustments while we continue to work through unprocessed returns and taxpayer correspondence,” the IRS statement said.
“The actions taken today by the IRS signals their desire to help taxpayers, but we believe that there is more they can do and respectfully disagree with the IRS’s assertion that congressional action is needed to suspend the automatic issuance of notices,” said Barry Melancon, president and CEO of the American Institute of CPAs, one of the organizations in the coalition of tax groups.
Tax season started on Monday, and one potential headache could be payouts on the rest of the boosted Child Tax Credit after millions of families received advance payments from July to December. Some notices on what the IRS already paid out are incorrect, according to some tax professionals.
The incorrect amounts on “Letter 6419” are isolated problems, the IRS said Monday and reiterated Thursday.
“The IRS is reviewing the situation, but we believe this is a limited group of taxpayers involved out of a much larger set of advance Child Tax Credit recipient,” the agency said in a statement Thursday. “There is no indication to support speculation that this could involve hundreds of thousands of taxpayers.”