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Filing Mistakes Are Preventing the IRS from Catching Up


The IRS still has an alarming amount of 2021 mail-in tax returns that are still caught in the backlog. The agency has been playing catch up ever since the start of the pandemic, dealing with a record amount of filing mistakes combined with a lack of IRS resources. Although the IRS announced they will be hiring 5,000 new employees over the next several months, they now have a new problem that is once again hindering them from performing their duties.

IRS Commissioner Chuck Rettig recently said in a statement that the growing problem of backlogged returns is largely attributed to “taxpayers’ inability to reconcile their Economic Impact Payments” Eligible Americans were able to claim two economic impact payments (EIPs) during the year 2020. Rettig did not make mention on the lack of IRS technology and resources or the $675 million they received to help alleviate this problem, and instead chose to contribute the problem directly to taxpayers.

So far over 10 million returns have been reported to contain improper information regarding the two economic impact payments. Additionally, another 10 million individuals reported unemployment compensation that was excluded from the 2021 filing season. The IRS stated that each of these returns requires a manual review which needs to be conducted by their employees.

To ensure your individual return does not become a victim of the backlog, there are a few preventative measures that can be taken into consideration

Check Your Mail for IRS Letters

The IRS has sent out over 100 million letters to taxpayers so far this year, a lot purposed to prevent any further processing delays. For example, Letter 6419 will provide the amount of money a taxpayer received for the 2021 Child Tax Credit, while Letter 6475 provides the taxpayer with the third economic impact payment amount received during 2021. These two letters are examples of documents that can be used to reconcile the actual payment amount with the amount entered on the return, which in turn would prevent your return from getting caught in the backlog.

Avoid Paper Processing If Possible

Due to the outdated IRS technology that inventories each return, the IRS says that paper processing can cause significant delays. They can be added to the backlog if there is an error in the process, and paper returns also limit taxpayers’ ability to check the status of their returns. To prevent this from even being a possibility, taxpayers are recommended to e-file their returns.

Wrap Up

It may seem like the IRS is facing a new problem every day and even though this may be the case, checking in with your tax professionals can alleviate almost any concern had over this tax filing season. Make sure your accountants have the correct information when they are preparing your tax return; and if you need help doing so, feel free to give us a call.

Questions? Concerns? Call DSJ at 516-541-6549 for more information.

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