No Filing Deadline Extension Recommended Despite IRS Backlog – NTA

The Internal Revenue Service should not extend the individual filing tax deadline, currently set at April 18 for most of the country, despite the significant backlog in processing of paper tax returns and other mail correspondence that can have an impact in the current the filing season, National Tax Advocate Erin Collins said.

“I don’t think the IRS needs additional time,” Collins said during a February 17 Senate Finance Committee hearing. “In fact, I think it will cause more challenges for the IRS because they have to go in and reprogram everything. It also impacts states. It also impacts preparers. I personally do not see it as a benefit right now for taxpayers.”

Collins reminded the panel that taxpayers have the option of requesting an extension if they need more time to file.

Jan Lewis, chair of the American Institute of CPAs’ Tax Committee agreed.

“The AICPA at this point does not advocate moving the tax due date,” Lewis said before the committee. “We obviously will be monitoring this as things happen. Our point is most of our members would like to keep the April 18 date.”

However, she stressed that if the tax filing due date were to change, “we want it to be announced as soon as possible, sooner rather than later, not just right before the deadline. And then also that it should include not just be the filing [deadline] but payments and also the first quarter estimated tax payment that would be due.”

Lewis did commend the steps the agency has taken so far to stop some of the automated notices from going out while the agency is working on clearing the backlog, but she recommended that more could be done to help taxpayers.

“There are still several other notices that we would like to see halted that are not on the list,” she said, adding that the agency has not helped with the penalty relief that AICPA has requested “that the taxpayers desperately need.”

The Finance Committee convened the hearing to examine the customer service issues facing the agency. Those problems were highlighted by preliminary report findings presented by the Government Accountability Office Director of Strategic Issue, Jessica Lucas-Judy.

The GAO data presented during the hearing reiterated what has been well known and publicized – that the IRS is struggling to address taxpayer needs – but added some additional data points to the discourse beyond the difficulties in reaching a customer service representative on the phone amid the backlog of unprocessed returns and other correspondence and issues with staffing levels.

For example, the report highlighted that from January 2021 to November 2021, the agency “suspended about 35 million individual and business returns in its Error Resolution System (ERS),” about an 86 percent increase in returns in the ERS compared to average volume of returns with errors from 2017 to 2019. These errors, such as math errors or discrepancies in income amounts, prevent the return from being processed automatically and require staff reviews for reconciliation, contributing to the backlog the agency is facing.

” IRS provided documentation indicating that during the 2022 filing season it expects about 21 million returns to be stopped for errors associated with recent tax law changes,” the report states.

Another aspect also highlighted was issues with the “Where’s My Refund?” online tool. GAO report noted that the tool provides limited information and taxpayers have had declining satisfaction with the app, but the IRS “does not have plans to modernize or replace the existing application. According to IRS officials, this is due to limited information technology resources funding to address the technical limitations of the application’s supporting infrastructure.”

Indeed, the IT infrastructure was a topic of conversation during the hearing with witnesses noting that a contributing factor to the backlog is the antiquated IT infrastructure the about 60 systems that stand alone and do not communicate with one another, which can cause more phone calls and written correspondence when automated information should be available to apps such as “Where’s My Refund?” and other IRS services.

“It’s very difficult for an IRS employee to assist either an IRS employee or the taxpayer without getting all these systems integrated,” Collins said, adding that the agency needs to “modernize our systems” that can be upwards of 60 years old and were never designed to share information.