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IRS Better Prepared For Upcoming Tax Season

Last week, Erin Collins of the National Tax Advocacy submitted her yearly report to congress. She acknowledged every hardship that taxpayers and tax professionals had to deal with last year. While acknowledging the pain and struggle of last season, Collins has a more positive outlook when it comes to this year’s tax season.

Backlog Reduced

Since the pandemic began in 2020, the IRS has been swimming in a backlog of unprocessed returns, and it seemed like they wouldn’t be able to even make a dent in reducing the humongous backlog. However, Collin’s report suggests that the IRS has made significant progress in reducing the number of unprocessed returns, which ultimately puts them in a stronger position for this year.

New Initiatives

In her yearly report, Erin Collins gives several initiatives that she suggests the IRS pursue in the upcoming years. The suggestions include ways to allocate the $80 billion the IRS will be receiving from congress in the next decade after The Inflation Reduction Act was signed into law.

Earned Income Tax Credit

Restructuring of the Earned Income Tax Credit was mentioned in the report. Collins suggested strategies that would ultimately encourage more eligible taxpayers to participate while lowering the amount of improper and fraudulent claims made.

Online Operations

The same report included a study aimed to help the IRS improve its online services. The study simply examined more than 40 states’ online tax operations as well as the online tax operations of some foreign countries. The best and most user-friendly online operations were highlighted, and Collins encouraged the IRS to initiate some of this technology.

Starting in Better Shape

Erin Collins predicts that despite the debacle of the last two tax seasons, the IRS is in a much better spot when the 2023 filing season begins.

“The main focus of this year’s report is the elephant in the room – the continuing customer service challenges taxpayers are experiencing and the negative impact of the filing season backlog,” Said Collins.

“Last year, I reported that the period since the start of the COVID-19 pandemic has been the most challenging that taxpayers and tax professionals have ever faced.  The bad news is that taxpayers and tax professionals experienced more misery in 2022.  The good news is that since the close of the 2022 filing season, the IRS has made considerable progress in reducing the volume of unprocessed returns and correspondence.  We have begun to see light at the end of the tunnel. I am just not sure how much further we need to travel before we see sunlight.”

Wrap Up

We are going to have to wait and see if taxpayers and professionals can rejoice in 2023. With loads of assistance coming to the IRS such as the $80 billion in funding and direct hire authority, we can only hope that they will allocate these resources correctly.

 
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