Tax pros’ top grumbles about the IRS coronavirus slowdown

August 27, 2020 4:10 PM

People are going to have a lot of memories of the pandemic — but even as the Internal Revenue Service emerges from its COVID-19-imposed slowdown, tax preparers and taxpayers will likely list “frustration” as one of the biggest.

“Payments aren’t getting applied timely and properly," said Paul Gevertzman, a CPA and partner at Top 100 Firm Anchin in New York. "Erroneous notices are getting issued. They still need to be reviewed even if we think at first glance that it is most likely erroneous, and that is time-consuming.”

Troubles seemed to come in many areas, as tax professionals shared their biggest gripes with IRS performance.

Please wait

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“Patience is crucial when working with the IRS during normal operations,” said Timothy Schuster, a senior manager in the private business services group of Top 100 Firm EisnerAmper in Iselin, New Jersey. “Clients dealing with tax matters that require specific action on the part of the IRS have seen a slowdown in both case resolution and taxpayer account review. We’re still working through longer-than-normal wait times when contacting the IRS.”

A failure to communicate

The seal of the Internal Revenue Service hangs on a podium during an IRS Criminal Investigation 100th year anniversary event at the IRS headquarters in Washington, D.C.

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“What I’ve found infuriatingly inconvenient has been the inconsistent communications originating from the White House, the U.S. Treasury and the IRS,” said Enrolled Agent John Dundon, president of Taxpayer Advocacy Services in Englewood, Colorado. “What my clients have found inconvenient has been the complete lack of verbal communication from the IRS and ultimately not knowing whether submitted correspondence has received any attention whatsoever.”

“A major hurdle was finding someone to talk to after our clients received collection notices threatening liens or levies,” said Michael Raiken, a CPA and senior tax manager in the Cranbury, New Jersey, office of Top 100 Firm Prager Metis. “Although the IRS self-imposed the [enforcement] freeze, clients were concerned that their accounts would be the exception. To the IRS credit, it did try to make sure that this didn’t happen and, after many attempts, we were successful in working with someone live at the IRS.”

No ‘fun’ in ‘refunds’

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“Refunds aren’t getting processed as quickly as we’d like — especially important when the need to maintain cash flow is so great,” said Anchin’s Gevertzman.

“I have a client waiting for a $200,000 refund due to amended returns,” added Lori Roberts, a CPA and director of state and local taxation for Top 100 Firm PBMares in Fairfax, Virginia. “He can really use that money to keep his businesses afloat.”

Paper trials

U.S. Department of the Treasury Internal Revenue Service (IRS) 1040 Individual Income Tax forms for the 2016 tax year are arranged for a photograph in Tiskilwa, Illinois, U.S., on Monday, Dec. 18, 2017. This week marks the last leg of Republicans' push to revamp the U.S. tax code, with both the House and Senate planning to vote by Wednesday on final legislation before sending it to President Donald Trump. Photographer: Daniel Acker/Bloomberg

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Disruption to IRS processing for paper-filed returns was “the most significant challenge we and our clients continue to face, by far and away,” said Nate Smith, a CPA and director in the National Tax Office of Top 100 Firm CBIZ MHM, in Clearwater, Florida. Some IRS solutions — especially a stop-gap solution to fax quick-refund net operating loss carryback claims, which are traditionally paper-filed — deserve praise, but he added, “There are many other returns — particularly claims for refund — that must be paper-filed and aren’t eligible for the temporary fax procedure.”

Write stuff

Correspondence with the IRS turned into a one-way street. “Most of my clients are complaining about any letter responses or paper-filed returns sent to IRS not being looked at and no knowledge if they were even received,” said Brian Stoner, a CPA in Burbank, California.

“The IRS said it has over 10 million pieces of unprocessed mail,” CBIZ’s Smith added, “so we think it could take four to six months or longer to process the amended return. And if there is a question with the amended return when it does get processed, it’s all the more challenging to get the question resolved.”

Payday

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Yet a “flurry of notices” to taxpayers also caused annoyance, according to Kimberly Dula, a CPA and partner at Top 100 Firm Friedman LLP in Philadelphia. “Many taxpayers filed their returns electronically at various times before the July 15 deadline [but] if the return happened to report a balance due and that balance was paid with a check, many of these checks have not yet been deposited by the IRS. As a result, the IRS system is showing that there is an outstanding tax liability and a notice is being issued.”

“We have clients that choose to pay their tax liability with a paper check,” said Gail Rosen, a CPA in Martinsville, New Jersey. Then the IRS stopped timely processing of paper payments and mailing of balance-due notices. “Couple this with less IRS personnel available to follow up on questions and issues, and you end up with another frustrating situation caused by the pandemic,” Rosen said.

Making amends

“The IRS indicated that they can’t process quick-refund claims until the amended return is processed, so how are these paper-filed returns supposed to be submitted?” CBIZ’s Smith said. “If they’re mailed separately, we’ll want to be sure the IRS knows about both filings so the cart isn’t placed before the horse. If they’re mailed in the same envelope, we may want to consider a backup duplicate filing of the quick refund claim in the event there’s a problem with the addition of that form in the same envelope as the amended return.”

Also concerning is the amended 2018 return situation. “Sometimes the amended 2018 return creates an NOL that’s then eligible for carryback. The temporary fax procedure isn’t available in this situation either, so both the amended return and the quick refund claim must be paper-filed,” he said.

Not all bad news ...

Time was on the side of some, though. “With our clients in tax controversy work, delays are often a welcome sight,” said Raiken of Prager Metis. “Our clients usually need more time to respond to IRS requests or time to gather funds to pay outstanding liabilities through installment agreements and offers in compromise.”