February 28, 2021 - Douglas Myser

Taxpayer advocates report about 2020. National Taxpayer Advocate Erin Collins released her annual report to Congress, highlighting the year 2020. It focused on the unprecedented challenges taxpayers faced in filing their tax returns and receiving refunds and stimulus payments during a year consumed by the COVID-19 pandemic. The report also finds that a roughly 20% inflation adjusted reduction in the IRS's budget since fiscal year 2010 has left the agency with antiquated technology and inadequate staffing levels to meet taxpayers needs. s part of the report, Collins released the fourth edition of the National Taxpayer Advocate's "Purple Boo", a compilation of 66 legislative recommendations designed to strengthen taxpayer rights and improve tax administration. Taxpayer advocates report about 2020.

"During 2020, the COVID-19 pandemic affected almost all facets of our lives, and U.S. tax administration was no exception," Collins said in releasing the report. "Taxpayers could not meet in person with their tax return preparers, IRS personnel who open and process tax returns and answer the toll free numbers had to follow social distancing guidelines and stay at home orders, limiting their ability to assist taxpayers. And Congress assigned the IRS the task of issuing two rounds of stimulus payments, stretching its resources even thinner." The report says the IRS in most cases, "can effectively handle whatever it can automate," and as a result, most taxpayers were well served. As of November 20, 2020, the IRS had received about 169 million individual income tax returns, including about 8.4 million that were filed solely to claim stimulus payments

About 90% of returns were e-filed and therefore were not delayed by the pandemic. Similarly, the overwhelming majority of EIPs were issued by direct deposit or automated mailings and were successfully and timely transmitted. The report says millions of taxpayers experienced major problems, including the fact that they had large refund delays due to COVID-19 and processing backlogs. They also had issues outside of the IRS, with mail carriers who contracted COVID, and that slowed down the delivery of stimulus payments to large numbers of individual taxpayers across the country. Congress is addressing the issue, by authorizing large funding increases for the IRS.