July was a productive month for the IRS when it came to making payments to taxpayers. However, frustration continues to grow for those still waiting for the refund of tax returns that have not yet been processed.
Unemployment adjustments
The IRS announced on July 28 that another 1.5 million taxpayers were receiving refunds averaging more than $ 1,600. The refunds, which involve unemployment compensation adjustments, are tied to the American Rescue Plan Act of 2021. When it became law on March 11, after many taxpayers had already filed their tax returns, among the provisions one was found that excluded up to $ 10,200 in 2020 unemployment. Compensation from taxable income calculations.
Through four rounds of refunds related to unemployment compensation adjustments, more than 8.7 million refunds have been issued, for a total of $ 10 billion. The IRS said more tax returns are expected to be adjusted over the summer, adding that it started with the simplest tax returns and is now reviewing the more complex ones.
More EIP Payments Made
A week earlier, the IRS announced advances in Economic Impact Payments, saying that more than 2.2 million additional payments had been sent, moving the overall total of disbursements under the American Rescue Plan to more than 171 million, with a total value greater than $ 400 billion.
The last batch included payments for people who recently filed a tax return, as well as "additional" payments for those who received payments based on their 2019 tax returns, but were eligible for new or higher payments once they were processed. your 2020 returns.
Child Tax Credit Prepayments Begin
On July 15, the IRS announced that approximately 35 million families had received initial monthly payments from the Child Tax Credit, with an outlay of about $ 15 billion. Advance payments of the Child Tax Credit (ACTC) are scheduled to continue through December, with the next one scheduled for August 13. More details about the ACTC can be found on the IRS website.
The IRS also held events over three weekends (one in June and two in July) in various US cities. To help eligible families sign up for ACTC payments, especially those families who are not normally required to file a tax return. The new Non-Taxpayer Registration Tool can help people register for both the Advance Child Tax Credit and Economic Impact Payments.
A challenging report
The payments in July came on the heels of National Taxpayer Advocate Erin Collins' mid-year report to Congress, released in late June, which highlighted a myriad of problems the IRS had during the 2021 tax season, a period time negatively affected by COVID-19. Pandemic.
The report details an IRS backlog of more than 35 million personal and business income tax returns that require manual processing. He also highlighted the low "Level of Service" the IRS had on its most frequently called toll-free number (the 1040 line), with only 3% of the approximately 85 million calls going to a "telephone assistant." As Collins noted in his report, when such a low percentage of calls go to one person, "the problems remain unresolved and taxpayer frustration increases."
The frustration continues
And speaking of frustration, several readers have reached out to me to share their experience of telephone insanity while looking for refunds or stimulus payments that were late in coming. GK said: "I have called the Internal Revenue Service (IRS) and spoke with representatives who give me very little comfort as they say they can only answer general questions." BB said, “Every time I call the IRS, I get different responses from different people; it's like they don't have a clue. " DT said, "I can't talk to a person."
Additionally, the announcement of other payments issued by the IRS can naturally make a frustrated taxpayer wonder if the agency is making headway in accumulating tax returns. According to "IRS Operations During COVID-19: Mission Critical Functions Continue," as of July 31, the IRS had "13.8 million unprocessed individual returns," representing a decrease of about 18 million in the first part of June.
Fixing the problems?
In his report, Collins recommended a number of steps the IRS should take to address the various problems that arose this year, including expanding callback technology for high-volume IRS phone lines. Collins previously made 73 recommendations in his year-end report; the IRS agreed to implement 48 of them in whole or in part.
Unfortunately, while those changes may improve IRS performance in the future, many people facing financial challenges need your funds now. As Collins noted in his report, "Over the next several months, the IRS should work through its backlog of tax returns and stay up-to-date on processing your correspondence as it focuses on rebuilding itself to become a more efficient and business-focused organization. taxpayer".