National Taxpayer Advocate’s Annual Report to Congress

The National Taxpayer Advocate Erin M. Collins issued the required annual report to Congress detailing the past filing season and making recommendations for future legislation (IR-2022-11; https://www.taxpayeradvocate.irs.gov/reports/2021-annual-report-to-congress/). She said “There is no way to sugarcoat the year 2021 in tax administration. From the perspective of tens of millions of taxpayers, tax administration did not work for them.”

As of late December, the IRS had backlogs of 6 million unprocessed original individual returns, 2.3 million unprocessed amended individual returns, more than 2 million unprocessed employer’s quarterly tax returns, and about 5 million pieces of taxpayer correspondence – with some of these submissions dating back at least to April 2021 and many taxpayers still waiting for their refunds nine months later.

The National Taxpayer Advocate 2022 Purple Book within the annual report, which is a compilation of legislative recommendations to strengthen taxpayer rights and improve tax administration, contained the following (this is a partial list of recommendations):

• Revamping the IRS budget structure to provide sufficient funding to improve the taxpayer experience and modernize the IRS’s information technology systems.
• Amending the look-back period for allowing tax credits or refunds to include the period of any postponement of time for filing a return (remember filing deadline for the 2020 return for individuals was postponed until May 17, 2021)
• Authorizing the IRS to establish minimum competency standards for federal tax return preparers
• Expanding the Tax Court’s jurisdiction to hear refund cases and assessable penalties
• Restructure the earned income tax credit (EITC) to make it simpler for taxpayers and reduce the improper payments rate