Oh, no!  After promising us that this year would be the first time in three years that the tax season would be normal (OK; not quite- the ending would be 18 April,  except for Massachusetts and Maine which are due on the 19^th), the IRS has already extended a deadline.  Because of the snow and fires in Colorado, the residents of the state will have to 15 May.  Let’s hope that’s the last extension of the season.

Otherwise, filing should begin on the 24^th of January for everyone.  Except if you are dealing with the EITC (Earned Income Tax Credit) or ACTC (Additional Child Tax Credit)- because the law stipulates the IRS can’t process those returns until 15 February.  (This was stipulated as part of the PATH (Protecting Americans from Tax Hikes [sic]) Act to ensure that fraudulent returns with false withholding and earnings can’t be submitted; that’s gives the Social Security Administration enough time to transfer W2 data to the IRS.)

And, let us not forget that Congress could still pass retroactive legislation (due to the tabling of the BBB [Build Back Better] Act) that will throw more than one monkey-wrench into the tax bucket.   The odds of the BBB passage is low- but many of its provisions can possibly pass by the 24^th of January.  Which will create havoc with the IRS.

Just like last year when Congress changed the rules- on 11 MARCH!!!!!– that stipulated the first $ 10,200 of unemployment insurance payments would not be subject to income tax for many taxpayers.   So, instead of having all the taxpayers subject to this change file amended tax returns, the IRS elected to change the tax returns themselves.  They did a pretty good job with this extra task.  So far 12 million folks got tax refunds due to the change in the rules- after they filed.  But, more folks are still waiting for those refunds.  (How many?  Only the Shadow knows.)

Except…

The backlog from 2019 (which had some 20 million unprocessed tax returns at the start of the 2020 tax filing season) and these unemployment changes didn’t disappear by the end of the CY 2021 (the 2020 tax filing) year.   Those returns that required special processing  (that means paper returns that requires IRS eyes and hands to deal with the forms) or contained errors were “skipped” by the IRS processing teams.

So, by the end of the year (18 December 2021), there were 6.3 million unprocessed individual tax returns still to be handled.  Not to mention 2.3 million amended tax returns that were still on the shelves.  Amended tax returns used to take up to four months to process; nowadays one can’t expect them to be in the system for at least 5 months. (Please note:  From what we know with our client data, the unprocessed tax returns did NOT mean the IRS didn’t glom onto the checks that were sent in with those returns.  Because we have proof that those payments cleared in a timely fashion.  The IRS obviously was worried about stale checks- and not stale tax returns.)

Those aren’t the only tax returns with problems.  (You do recall that some 90% of tax returns are filed electronically.  They are the easy ones for the IRS to process.  It’s the paper returns- which require fully staffed offices [NOT]- that fall behind.)  That’s why some 2 million 941’s (employer quarterly payroll tax returns are in the unprocessed pile.  Not to mention some 5 million letters from taxpayers that are languishing.

In 2021, the IRS received 282 million calls, compared with just 100 million in 2019. The agency’s workforce did not keep pace with the higher demand. Although the IRS answered more calls than recently, it took only 11.4 percent of them — down from 29 percent the year before the pandemic. The IRS reported an average hold time of 23 minutes.

Given  this mess, it is not surprising that the time to process income tax adjustments has ballooned from 74 days in 2019 to 199 days now.  Or that the calls to the IRS now exceed 280 million- as opposed to 100 million before the pandemic.  Assuming one gets an answer on the phone, the wait time is 23 minutes.  (This is an unfair number.  It averages in the wait folks like me get- who have a special number that is processed first- with the wait the Average Joe or Jill gets calling the general IRS number.)  And, since the IRS only has 15000 folks to answer those lines,  that’s almost 19000 calls per employee- or more than 9 an hour.

To cut down on the plethora of errors that have been associated in the past with the stimulus payments (folks did not recall- or properly report- how much of the two stimulus payments they received- and could occur this year with the advanced child tax credits that were made in 2021; they may even be restarted by Congress, after the provisions expired at the end of CY 2021]), the IRS is mailing Letter 6419 [for the Advanced Child Tax Credit] and/or Letter 6475 [for the third economic stimulus payment] to all taxpayers who received those funds.  Those letters should be in the hands of all recipients before the official start of tax filing season.

If you read this post very carefully, you will have discerned that filing electronically and employing direct deposit will be the best way to ensure the IRS processes your tax return in a timely fashion.  Oh- and it better be without any errors.