IRS Backlog is Brutal
The IRS being backed up comes as a shock to few this year, following last year’s closure of the IRS’s offices there has been a game of catch-up ever since. Recently, a group of 99 House Republicans sent a letter to the IRS commissioner Charles Rettig asking for some information on how the backlog of unprocessed returns will be fixed before the 2022 filing season. This comes shortly after the Treasury General for Tax Administration reported that over 9.6 million unprocessed paper returns were received in 2021, and an additional 5 million paper and e-file returns have been suspended during processing.
This massive backlog can cause significant and unnecessary burdens on families and small businesses, who can’t get answers from the IRS on why their returns have not been processed. On top of this, the Republicans who wrote to the IRS are concerned, “The IRS is in danger of falling into a vicious backlog cycle that will harm millions of taxpayers.” The IRS has not yet responded to this letter received, however, we will keep our eyes peeled for updates on this!
Enhanced Child Tax Credit to Expire
Over 35 million families have relied on monthly child tax credit payments at some point this year, and without some intervention, they may expire. To continue these monthly advanced payments, President Biden’s $1.75 trillion Build Back Better plan will need to pass, without it the child tax credit will return to its pre-pandemic form. Let’s take a look at the credit in both forms:
Enhanced Form:
The enhanced child tax credit distributes $3,000 per child with an additional $600 bonus for kids under the age of 6. Additionally, it establishes monthly payments of $300 per child for those under the age of 6 and $250 for those aged 6-17, with the remainder of the full amount to be paid when families file their 2021 returns. This credit was also available to more families as it made the credit fully refundable, meaning even families without earned income could claim the benefit for eligible kids.
Before Expansion:
Without the expansion to the child tax credits, there would be many current features that would no longer apply, such as the advanced payment, full refundability, and more. Additionally, the increased amount will also be reduced back to its original amount of $2,000. These will all go away following a final December 15th advanced payment, without the passage of the Build Back Better plan.
US Inflation Soars to 39-Year High
U.S. inflation reached a near four-decade high this past November as strong consumer demand collided with pandemic-related supply chain constraints. According to the U.S. Labor Department, the consumer-price index rose 6.8% in November from a year ago to the month. Not only was this past month’s increase massive, however, for the past 6 months the inflation rate has been over 5%. An even more conservative scale used, called the core price index can be seen rising 4.9% this past month even as it excludes some of the most volatile pricing sectors.
Consumers have been seeing inflation affect prices on many commodities, forcing an increase in consumer costs for some time now, however this past month saw some of the largest increases in industries to date. These record-breaking increases in price affected the automobile industry, men’s apparel, and house furniture, which all saw about an 11% jump in November. Additionally, fast food also saw its largest spike with a 7.9% increase this past month. Many economists are already attempting to solve this issue currently, with many agreeing that we should start to see inflationary pressure to continue through year-end, easing more in 2022.