The IRS has responded to growing pressure to provide some automated notice relief to taxpayers in a post to their website dated January 27, 2022.[1] The page provides a statement that both attempts to defend what the agency has done to date and provide information on actions being taken or that may be taken to reduce the automated notice issues that have drawn attention recently.

The statement begins by describing the situation the IRS has faced:

The IRS entered this historic pandemic without the funding that it needs to serve the American people. As part of our ongoing efforts during the pandemic, and within these limited resources, the IRS has aggressively pursued every available option to better serve taxpayers this filing season. This includes, where appropriate and possible, requiring overtime by IRS employees, the redeployment of employees between functions, transfer of inventories among posts of duty, deployment of experienced surge teams – all aimed at returning our processing and correspondence inventories to a healthy level and improving our overall services to taxpayers and tax professionals. The IRS also developed and deployed important technology allowing employees to review and process tax returns filed with errors at many times the rate in the past. We are clearly not where we want to be at present. But our employees have been hard at work to develop innovative processes to expedite inventory reductions during the past year. Despite substantial progress thus far, another challenging filing season is ahead.[2]

The statement then notes the IRS is looking to take various actions, including dealing with automated notices:

As part of this ongoing effort and balancing the importance of protecting the interests of tax administration, the IRS has also been taking important steps to modify our operations and provide additional taxpayer relief. These efforts include suspending issuance of certain automated notices and related actions. We are looking at the suggestions that have come in, and we will continue modify and adjust our efforts going forward to help taxpayers and the tax community.[3]

The statement then provides information on relief that the IRS has begun providing—to stop issuing notices to taxpayers stating they have not filed a return while the IRS claims to hold a credit not applied to any return—a credit that, quite often, perfectly matches the check the taxpayer sent in with the return the agency claims they failed to file:

For example, we have already decided to suspend notices in situations where we have credited taxpayers for payments but have no record of the tax return being filed. In many situations, the tax return may be part of our current paper tax inventory and simply hasn't been processed. Stopping these letters — which could have otherwise been sent to thousands of taxpayers — will help avoid confusion.[4]

But the agency then goes on to explain why other notices will likely continue to be issued, first arguing some notices must go out by a certain date per the statute:

It is important to appreciate that many IRS notices are statutorily required to be issued within a certain timeframe to be legally valid. This means they must be sent, absent congressional action.[5]

The agency then indicates it is looking at other notices, but then argues that issues with its IT systems will get in the way of providing rapid relief:

We will continue to explore areas where the IRS can make changes and are in the process of reviewing the full set of notices that we send to determine where we can make adjustments while we continue to work through unprocessed returns and taxpayer correspondence.

Making significant operational changes to our systems, including stopping certain notices from being printed and mailed, may require programming and other operational changes. With an outdated technological ecosystem, these are changes that cannot be made as efficiently as they should be — and that is part of the reason why investing in IRS IT modernization is so important. While we will make every effort to find improvements to help taxpayers, we will have to do so in the constraints of an outdated system, where a seemingly simple modification could run the risk of jeopardizing the overall operating system critical to the current tax season — and the more than 160 million returns we anticipate receiving.[6]

The statement then concludes by indicating that the agency is working on additional changes:

The IRS is continuing to assess other changes and system modifications it may be able to implement to assist taxpayers on an array of issues. We will continue to make information available to taxpayers throughout the filing season.[7]

[1] “IRS Statement — Providing meaningful assistance to taxpayers in the current environment,” IRS website, January 27, 2022 version, https://www.irs.gov/newsroom/irs-statement-providing-meaningful-assistance-to-taxpayers-in-the-current-environment (retrieved January 27, 2022)

[2] “IRS Statement — Providing meaningful assistance to taxpayers in the current environment,” IRS website, January 27, 2022 version

[3] “IRS Statement — Providing meaningful assistance to taxpayers in the current environment,” IRS website, January 27, 2022 version

[4] “IRS Statement — Providing meaningful assistance to taxpayers in the current environment,” IRS website, January 27, 2022 version

[5] “IRS Statement — Providing meaningful assistance to taxpayers in the current environment,” IRS website, January 27, 2022 version

[6] “IRS Statement — Providing meaningful assistance to taxpayers in the current environment,” IRS website, January 27, 2022 version

[7] “IRS Statement — Providing meaningful assistance to taxpayers in the current environment,” IRS website, January 27, 2022 version