![]() The IRS sent millions of notices to taxpayers during 2022. While some will turn out to be fraudulent claims, the IRS website as of January 9 states: "ue to extenuating circumstances caused by the pandemic, our identity theft inventories have increased and on average it is taking about 360 days to resolve identity theft cases." The report calls a year-long delay "unacceptable" and urges the IRS to assign additional employees to process these cases.ĭelays in processing taxpayer correspondence and other cases in the Accounts Management function. In mid-December, the IRS reported 2.9 million identity theft cases in its inventory. ![]() The inventory grew to 5.9 million suspended returns by mid-December.Ĭases involving suspected identity theft account for about half the inventory of suspended returns. The IRS entered 2022 with an inventory of 4.2 million suspended returns. The number of returns suspended during processing is the only significant return category in which inventories increased. That contrasts with the previous two years, when the IRS was not able to process current-year returns until months after the filing season had ended. This significant reduction in the paper return inventory will enable the IRS to begin processing paper-filed tax year 2022 returns during the upcoming filing season. 23, the IRS had further reduced its unprocessed paper backlog of original individual returns to about 400,000 and original business returns to about 1 million. When the Advocate's report went to press in mid-December 2022, the IRS had reduced those backlogs to 1 million original individual returns, 1.5 million original business returns, and 1.5 million amended returns. The IRS began 2022 with an unprocessed paper backlog of 4.7 million original individual returns (Forms 1040), 3.2 million original business returns, and 3.6 million amended returns (individual and business combined). However, the report says the IRS will be starting the 2023 filing season in much better shape than the last two years. Hundreds of thousands of business returns claiming the Employee Retention Tax Credit were delayed. ![]() Millions of e-filed individual returns were "suspended" because they tripped IRS processing filters and required manual review by IRS employees before refunds could be released. Because of paper processing delays, refunds for these taxpayers were delayed, generally by six months or longer. About 13 million individual taxpayers filed paper returns. The report says the IRS failed to meet its responsibility to pay timely refunds to millions of taxpayers for the third year in a row. In 2022, about two-thirds of individual taxpayers were entitled to refunds, and the average refund amount was nearly $3,200. ![]() For most taxpayers, the most important function the IRS performs each year is issuing timely tax refunds. ![]() It also contains two research studies – one on ways to restructure the Earned Income Tax Credit to increase participation among eligible taxpayers while reducing improper payments, and the other designed to help the IRS improve its online operations by studying the functionality of online operations offered by over 40 states and several foreign countries. This year's report recommends specific initiatives that Collins is urging the IRS to include in its plan showing how the additional funding it received in the Inflation Reduction Act will be spent. The Advocate's report assesses taxpayer service during 2022, identifies the ten most serious problems taxpayers are experiencing in their dealings with the IRS, and makes administrative and legislative recommendations to address those problems. But the report also says the Internal Revenue Service made considerable progress in reducing the volume of unprocessed tax returns and correspondence and is poised to start the 2023 filing season in a stronger position. Collins today released her 2022 Annual Report to Congress, saying taxpayers and tax professionals "experienced more misery in 2022" due to paper processing delays and poor customer service. WASHINGTON - National Taxpayer Advocate Erin M. ![]()
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