April 12, 2022 - Douglas Myser

IRS push to update its computer system. The recent backlog of IRS paper tax returns has resulted in a pubic outcry over the terrible service at the IRS. While it is a bad thing, in the long run, it may be what the agency needed to get the attention of Congress, who have neglected the agencies funding request over the last decade. The IRS is buried in paper returns, which must be addressed manually, line by line. That is causing problems. But normally the IRS could handle that, but over the last few years, it has had to deal with two large tax code changes, and administering the Covid stimulus as a tax filing requirement was necessary, a task the IRS should not normally have to take on. What would truly help is if the modernization of the oldest computer system in the government. The IRS is trying to slowly get taxpayers to file tax returns online, but wary of data breaches, many Americans will continue to file paper returns, which they view as a safer alternative. IRS push to update its computer system.

One recommendation made to lower the IRS burden was to delay implementing its requirement that passthrough entities with "items of international tax relevance" file Schedules K-2, Partners Distributive Share Items--International, and K-3, Partner's Share of Income, Deductions, Credits, international and similar forms for S Corporations. The IRS did clarify that some entities did not have to file the schedules for 2021. But the schedules instructions were revised during the current filing season, and affected entities are currently unable to e-file them.

The Congress has recently been questioning witnesses on issues of IRS funding and the Service's resources, particularly its outmoded and some respects antiquated computer processing systems that they rely on for manual tasks. The Taxpayer advocate noted that only 12 percent of all calls to the IRS in 2021 were actually answered. IF you are facing a back taxes issue, or have unfiled tax returns that will cause an IRS debt, contact our 35 year old Tax Resolution Services firm, for every option you have in the IRS Code for Tax Relief, including the IRS Fresh Start Program.