IRS processing delays for the 2022 filing season

The IRS has warned taxpayers and practitioners that they are likely to experience a “frustrating season” as a result of pandemic delays, budget cuts and the implementation of COVID-19 legislation. As of late December, the IRS had a backlog of over 10 million returns and 5 million pieces of taxpayer correspondence. Given the current situation, filers should be prepared for additional service delays this year.

In response to pressure from practitioners, professional organizations and members of Congress, the IRS issued a statement on Jan. 27, 2022, indicating it plans to suspend certain automated notices and related actions. For example, it will be suspending notices for taxpayers having received credit for payments with no record of a filed return. The IRS did warn that certain notices are statutorily mandated to be issued within a certain time frame to be legally valid, and congressional action is needed to make changes to these requirements. The IRS also pointed to their outdated technological ecosystem, calling for investment in IRS IT modernization.

While the relief the IRS is providing is appreciated, it is limited and does not address some of the most pressing issues facing taxpayers as they attempt to interact with the IRS. Some of the most urgent taxpayer needs that the IRS has yet to resolve include:

• Discontinuing automated collections until appropriate resources can be devoted for proper and timely resolutions
• Aligning account holds to correspond with the time it takes the IRS to process penalty abatement requests
• Developing a reasonable cause penalty waiver that can be utilized without written correspondence, similar to that used for first-time abatement, without affecting the taxpayer’s ability to use first-time abatement in future
• Delaying collections for filers with active and pending penalty abatement requests until they can be processed
• Proving taxpayers with underpayment penalty relief for 2020 and 2021, including both underpayment and late payment penalties 

These concerns are also outlined in letters from a coalition of 11 vested organizations and another from 191 congressional representatives and 25 senators. None of these concerns seems to be addressed in the current IRS plan to provide meaningful taxpayer relief.