A number of tax professional organizations, including the AICPA and NAEA, have sent a joint letter to the IRS calling for the agency to take actions to reduce the burden on taxpayers from the agency’s extreme backlog in processing tax returns and dealing with correspondence.[1]

The organizations signing the letter are:

• American Institute of CPAs (AICPA)

• Latino Tax Pro

• National Association of Black Accountants, Inc. (NABA)

• National Association of Enrolled Agents (NAEA)

• National Association of Tax Professionals (NATP)

• National Conference of CPA Practitioners (NCCPAP)

• National Society of Accountants (NSA)

• National Society of Black Certified Public Accountants, Inc. (NSBCPA)

• National Society of Tax Professionals (NSTP)

• Padgett Business Services

• Prosperity Now

Relief Requested

The letter begins by noting the impact the COVID-19 pandemic has had on the IRS, taxpayers and tax professionals:

The Coronavirus Disease 2019 pandemic (commonly known as “Coronavirus”) has created unforeseen and long-lasting difficulties for the Internal Revenue Service (IRS or “Service”), taxpayers and tax professionals alike. As we start a third tax filing season under a new variant of the Coronavirus, the Department of the Treasury (“Treasury”) and the IRS “are under no illusions that it's going to go smoothly.”[2]

The letter points out specific backlogs the IRS is facing that create issues for taxpayers and tax professionals:

Currently, the IRS still has an unprecedented number of unprocessed returns in comparison to years before the pandemic. Consequently, the IRS sends numerous mistargeted notices, liens and levies. Additionally, the IRS is only answering 9 percent of all calls and only 3 percent of calls regarding individual income tax returns which prevents taxpayers from resolving these straightforward issues.[3]

However, the letter argues the IRS has not taken sufficient action to relieve the burdens associated with these issues:

Though we appreciate that the IRS recognizes that it is frustrating for all, including the IRS, that the IRS is “unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs,” the Service has not taken reasonable actions that would meaningfully reduce unnecessary burdens during this upcoming tax filing season.[4]

The letter requests the following actions to be taken by the agency:

To reduce the need for taxpayers and tax professionals to communicate with the IRS due to the persistent and erroneous notices, Treasury and the IRS should:

• Discontinue automated compliance actions until the IRS is prepared to devote the necessary resources for a proper and timely resolution of the matter.

• Align requests for account holds with the time it takes the IRS to process any penalty abatement requests.

• Offer a reasonable cause penalty waiver, similar to the procedures of first time abate (FTA) administrative waiver, without affecting the taxpayer's eligibility for FTA in future tax years.

• Provide taxpayers with targeted relief from both the underpayment of estimated tax penalty and the late payment penalty for the 2020 and 2021 tax year.[5]

National Taxpayer Advocate Report to Congress and Proposed Congressional Action

The first two suggestions are similar to suggestions made by National Taxpayer Advocate Erin M. Collins in her 2021 Annual Report to Congress,[6] and the letter notes this in footnotes to the letter.

Ms. Collins spoke at a virtual seminar of the California Society of Enrolled Agents regarding these issues, a presentation covered in Tax Notes Today Federal in its January 14, 2022 edition.  The article reported:

Collins said the Taxpayer Advocate Service[7] has been trying to persuade the IRS to temporarily stop issuing automated notices amid the processing backlog at the agency. And while the IRS has resisted that recommendation, Collins said, congressional lawmakers seem increasingly receptive to it because they’re hearing from their constituents about the challenges they’ve encountered with the IRS.

Collins said she received a lot of questions about a potential notice freeze during her visit to Capitol Hill following the release of her annual report to Congress January 12.[8]

The article continues to note the type of freeze TAS has been proposing the agency institute:

TAS has been recommending a six-month hold for collection notices, because “nine weeks and the current situation isn’t doing any good,” Collins said, referencing the standard hold period granted to practitioners who get an IRS collections representative on the line.

Once the automated notices are issued, they’ll keep coming regardless of whether the taxpayer has a legitimate explanation for why the rationale presented in the notices is wrong, Collins added.[9]

Could Congress Actually Act?

Unfortunately, this is not the first time the IRS has been approached to institute relief programs, including stopping the issuance of automated notices when the IRS has not yet been able to process responses to earlier notices.  But another article in that issue of Tax Notes Today Federal indicates that the offices of members of Congress are now beginning to be overwhelmed by constituent requests for relief.[10]

The articles cites as evidence of the increased pressure on Congressional offices the significant increase in the number of referrals from such offices to TAS:

Referrals ballooned in 2020 as the COVID-19 pandemic led to IRS office closings around the country and surged again in 2021 as the agency’s struggles continued. During the three years before the pandemic, members of Congress asked the taxpayer advocate to assist with constituent problems 10,000 to 11,000 times a year. That figure jumped to about 35,000 in 2020. The 66,453 referrals from members of Congress in 2021 represent a sixfold jump from the pre-pandemic level. [11]

But such referrals are now adding to the excess burden on TAS, as the article continues:

“Hey, we’re happy to help, but we’re struggling, too,” Collins said, noting that while taxpayers are having a hard time getting through to the IRS, congressional offices also are having difficulty getting through to her hard-pressed staff.[12]

The article goes on to provide information from a number of Senators and Representatives about the problems they are facing dealing with constituent service requests on these issues.[13]

Given that 2022 is an election year, Senators’ and Representatives’ inability to provide services to constituents to resolve issues with the IRS and other agencies (the article notes the issue is not limited to the IRS, specifically mentioning issues with the Social Security Administration)[14] may spur an impetus to take some sort of action to grant relief or face the wrath of voters at the polls in November.

[1] Letter Re: Relief for Taxpayers for the 2022 Filing Season, Tax Notes Today Federal, January 14, 2022, https://www.taxnotes.com/tax-notes-today-federal/penalties/organizations-call-taxpayer-relief-filing-season/2022/01/18/7d3bl (subscription required, retrieved January 15, 2022)

[2] Letter Re: Relief for Taxpayers for the 2022 Filing Season, Tax Notes Today Federal, January 14, 2022

[3] Letter Re: Relief for Taxpayers for the 2022 Filing Season, Tax Notes Today Federal, January 14, 2022

[4] Letter Re: Relief for Taxpayers for the 2022 Filing Season, Tax Notes Today Federal, January 14, 2022

[5] Letter Re: Relief for Taxpayers for the 2022 Filing Season, Tax Notes Today Federal, January 14, 2022

[6] National Taxpayer Advocate Annual Report to Congress 2021, January 12, 2022, https://www.taxpayeradvocate.irs.gov/reports/2021-annual-report-to-congress/full-report/

[7] TAS

[8] Benjamin Guggenheim, “Congress May Consider Pausing Automated IRS Notices,” Tax Notes Today Federal, January 14, 2022, https://www.taxnotes.com/tax-notes-today-federal/collections/congress-may-consider-pausing-automated-irs-notices/2022/01/14/7d35c (subscription required, retrieved January 15, 2022)

[9] Benjamin Guggenheim, “Congress May Consider Pausing Automated IRS Notices,” Tax Notes Today Federal, January 14, 2022

[10] Doug Sword, “Lawmakers Report Surge in Requests for Help With Unresponsive IRS,” Tax Notes Today Federal, January 14, 2022, https://www.taxnotes.com/tax-notes-today-federal/politics-taxation/lawmakers-report-surge-requests-help-unresponsive-irs/2022/01/14/7d35l (subscription required, retrieved January 15, 2022)

[11] Doug Sword, “Lawmakers Report Surge in Requests for Help With Unresponsive IRS,” Tax Notes Today Federal, January 14, 2022

[12] Doug Sword, “Lawmakers Report Surge in Requests for Help With Unresponsive IRS,” Tax Notes Today Federal, January 14, 2022

[13] Doug Sword, “Lawmakers Report Surge in Requests for Help With Unresponsive IRS,” Tax Notes Today Federal, January 14, 2022

[14] Doug Sword, “Lawmakers Report Surge in Requests for Help With Unresponsive IRS,” Tax Notes Today Federal, January 14, 2022