The Internal Revenue Service is prematurely sending some Americans collection notices even though they filed their returns, as the agency works to wade through a deluge of unprocessed returns from years past.
That’s according to a report from National Taxpayer Advocate Erin Collins, who warned that the IRS took too long to process taxpayer responses to its notices, further delaying refunds and in some instances, leading to premature collection notices – an occurrence that prematurely hurts low-income Americans.
The IRS sent tens of millions of notices to taxpayers in 2021, including 14 million math error notices, automated underreported notices (where an amount reported on a tax return did not match the corresponding amount reported to the IRS on Form 1099), notices requesting a taxpayer to authenticate his or her identity and collection notices.
In many cases, taxpayer responses were required; if individuals failed to respond – or they did and the IRS failed to process it due to the severe backlog – it could “take adverse action or not release the refund claimed on the tax return,” Collins wrote.
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Programmers always have been the bane of this agency. Virtually everything is dependent on a plethora of computers, large and small, and IT staffs that compete for control. While choking on their ambition (remember Lois Lerner), IRS employees struggle with altered statutes, regulations and case law, about 70,000 pages that show how to file your taxes.
A problem for the Department of Treasury is the income tax system has become every American’s biggest annual nightmare. An average taxpayer expends 8 hours to prepare each of 169 million returns, more than 1.35 billion hours just for individual taxes. That doesn’t include business tax returns, the larger of which require staffs to keep them legal.
According to the Tax Foundation, “Americans spent over 3.24 billion hours, which is about 369,858 years, preparing and filing tax returns in 2012. Considering individual, business and employment taxes, this costs $37 billion annually in compliance cost for federal taxes alone.” None of this includes the $12.3 billion for overall operations of the IRS itself.
I keep wondering when this nation will wake up to the advantages of several alternative systems, e.g., sales tax, flat tax, Fair Tax, etc. The government argues that we need the voluntary compliance income tax system to ensure fair treatment from the poorest to the richest citizens. Most believe those obstacles can be overcome for considerably less cost.