National Taxpayer Advocate Erin Collins released her annual report to Congress in December

. While the report’s tone touts progress, there are still significant issues and delays. Among the data released:

• As of mid-December 2022, there was a backlog of 1 million originally filed individual returns, 1.5 million originally filed business returns, and 1.5 million amended returns.
• There remains a backlog of 5.9 million returns suspended from processing. Approximately 2.9 million were flagged as identity theft cases.
• During fiscal year 2022, the IRS took an average of 193 days to process and respond to taxpayer notice responses. During fiscal year 2019, the average response delay was 89 days.
• The IRS received 173 million calls in 2022 – only 22 million (13%) got through to an employee after waiting an average of 29 minutes.
• Tax professionals have a dedicated telephone line for resolving account-specific questions. According to the Taxpayer Advocate, IRS employees answered only 16% of those calls from professionals. Based on our experience, we believe the success rate is probably less than 10%.  Many times, there is a recorded message stating that call volume is high and calls are not being accepted.

2023 Outlook

Collins suggested the IRS will improve in 2023 with the hiring of 4,000 additional customer service representatives. There is also an effort underway to hire 700 employees at Taxpayer Assistance Centers.  Even if the employees are hired, the relief will not be immediate due to onboarding and training processes.

Be Patient

We generally respond to tax notices within a week, depending on the time of year. With an average six-month delay in IRS response times, you may receive additional notices in the meantime or the famous “we need more time” letters.  We responded to one notice in May 2022 and have yet to receive a response from the IRS.

Other Thoughts

• If possible, e-file all returns that can be e-filed. We are generally only paper filing forms that cannot be e-filed unless the client requests otherwise.
• If you must paper file a return or correspondence, send via certified mail with return receipt. With significant processing delays and penalties at stake, this is your only evidence that the document was mailed.
• Use electronic payment options rather than mailing checks. Some clients have experienced lost or unprocessed Federal estimated tax payment checks (we see very few issues with Alabama). One easy way to avoid this is to use IRS Direct Pay or EFTPS and draft the estimates from your bank account. See instructions here: A Better Way to Make Federal and State Tax Payments?

If you have specific questions, please contact a Dent Moses advisor.