Your Tax Refund May Be Delayed
Our IRS is in chaos because of President Joe Biden’s child tax credit provision of last year that pays parents monthly for each kid they have. In addition, Biden has proposed creating an army of auditors at the IRS to raise more funds. We know the IRS has targeted certain groups in the past, so this “army” is no good thing.
From Fox Business: Tax filing season isn’t just crunch time for taxpayers, it’s also a busy time for the Internal Revenue Service (IRS).
The agency carried over into 2022 a backlog of 6 million unprocessed individual returns, 2.3 million amended individual returns, 1 million unprocessed employment tax returns, and half a million amended employment tax returns — on top of the 2022 tax season’s responsibilities. To wit, fewer than 20% of the 120 million calls made to the agency last year were answered.
IRS Commissioner Charles Rettig recently authored an op-ed describing the situation, making the case for a larger IRS staff to deal with the situation. Expanded staffing would certainly help the current problem, but the core reasons behind why the IRS is so overwhelmed still remain…
1) IRS INTERNAL TECHNOLOGY IS WOEFULLY OUTDATED
The IRS’s Individual Master File, the primary system for processing individual tax account data, was developed in the 1960s. The Taxpayer Advocate Service (an office within the IRS devoted to taxpayers’ interests) has long beaten the drum for improving the agency’s IT because out-of-date technology hurts both tax filers and tax collectors…
2) NEED MORE PROGRAMS SUCH AS RRP
By better targeting the IRS’s audit operations, programs like RRP can help reduce fraud and raise revenue with less undue scrutiny on law-abiding taxpayers…
3) DELEGATE SOME IRS DUTIES TO OTHER AGENCIES
The U.S. relies on the agency to distribute a large portion of its safety net programs. The mission of the IRS, however, is to raise revenue, not to administer social benefits. Requiring the IRS to oversee health care, education, family, energy, and work-related tax benefits leads to confusion, adding to the unacceptable backlogs taxpayers are dealing with today.
For instance, the Earned Income Tax Credit (EITC) has a notoriously high error rate largely due to its complexity. In 2018, the IRS estimated that roughly 25% of the $73.6 billion in EITC claims were improper…
4) SHIFT ADMINISTRATION OF SOCIAL SERVICE PROGRAMS
Relying on the tax system to deliver social spending also has downsides for recipients. In most years, families benefit from credits like the EITC and CTC when they file their taxes, receiving their aid in an annual lump-sum payment, rather than monthly payments. For a cash-strapped family, tax season often can’t come fast enough. Last year, the temporarily expanded CTC passed in the American Rescue Plan was partly paid in monthly installments, a change to better match payments with people’s needs but a difficultpolicy for the IRS to administer efficiently…
Ultimately, while hiring more staff would help in the current crisis, policymakers must think long-term. Congress needs to invest in critical IT upgrades and stop tasking the IRS with administering complex social programs.
What do you think? Let us know in the comments!
(Excerpt From Fox Business. Photo Credit: Getty Images)
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