Lawmakers question IRS readiness for next tax season amid backlogs from coronavirus

The leaders of Congress’s main tax-writing committee are wondering if the Internal Revenue Service will be ready to handle next tax season as it’s still processing millions of pieces of correspondence that went unopened for months during the COVID-19 pandemic.

The leaders of Congress’s main tax-writing committee are wondering if the Internal Revenue Service will be ready to handle next tax season as it’s still processing millions of pieces of correspondence that went unopened for months during the COVID-19 pandemic.

House Ways and Means Committee chairman Richard Neal, D-Massachusetts, and Oversight Subcommittee chairman Bill Pascrell, D-New Jersey, sent a letter Thursday to IRS Commissioner Chuck Rettig asking him to answer their concerns about the agency’s preparedness for the upcoming tax-filing season due to the ongoing backlogs.

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Lowell Smith chief compliance officer and co-founder of IRALOGIX
Lowell Smith Jr.

Lowell M. Smith Jr. is chief compliance officer and co-founder of IRALOGIX.

His previous experience includes working for the ERISA enforcement agency in the U.S. Department of Labor. He created a TPA compliance practice and consulted on products, procedures and technology for clients of Universal Pensions, now Ascensus. He is a published author and a frequent speaker at industry conferences.

Paul Tyler

Paul Tyler is Head of Enterprise Marketing and Marketing Innovation at Zinnia, previously serving as CMO at Nassau Financial Group where he led branding strategy, digital initiatives, and built direct-to-consumer channels for insurance products. With deep expertise in financial services marketing and digital transformation, Paul brings a practical perspective on how advisory firms can leverage technology to enhance client engagement while maintaining the human connection that's essential in financial services.

Gordon Gray is the executive director of the Pinpoint Policy Institute. Prior to launching Pinpoint, Gordon served as the vice president for economic policy at the American Action Forum, where his portfolio included the federal budget, taxes, the macroeconomic outlook and general economic policy matters.

“Clearly, the current filing season has been long and challenging for the IRS due to the ongoing pandemic, and we are concerned about another filing season fast approaching,” they wrote. “As you are aware, this filing season, the tax filing deadline for individual returns was extended to July 15, and the automatic tax filing extension of October 15 only just passed. Millions of taxpayers still have not had their tax returns processed, and we continue to hear from constituents who now believe their returns are ‘missing’ and others who anxiously await needed refunds. With the current backlogs, it appears the processing of 2019 returns likely will extend into 2021.”

House Ways and Means Committee chairman Richard Neal, D-Mass.
Rep. Richard Neal, D-Massachusetts
Anna Moneymaker/Bloomberg

They pointed out that the end of the calendar year is a time when the IRS usually develops tax forms and publications, prepares and tests its information systems for changes to the tax laws, and staffs and trains taxpayer assistance and other employees for the next filing season. In addition to the typical filing season workload, they noted that the IRS has some additional responsibilities this year related to the tax provisions in the CARES Act.

That includes processing the remaining Economic Impact Payments that have yet to be distributed. On Friday, the IRS announced that it has designated Nov. 10 as National EIP Registration Day in an effort to get the remaining taxpayers who have not yet received their payments ahead of the extended Nov. 21 registration deadline.

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“While we remain troubled by the backlogs and issues attendant to the current filing season overflowing into the next year, we also are worried that the next filing season will arrive without the normal IRS preparedness and the necessary pandemic contingency preparedness,” Neal and Pascrell wrote.

They asked Rettig for answers by next Thursday to their questions about whether the 2021 filing season will begin on time next year, on what date the IRS expects to open the filing season, and is the IRS prepared for it.