The IRS is backlogged in many of their processing functions, and it is causing serious problems for many of our clients.
Some taxpayers still have not received their 2020 refunds for returns they filed back in April. Others are having their 2020 refunds reduced but getting no explanation why.
An even bigger problem is the IRS backlog in processing letters from taxpayers. We currently have about 25 open cases of the IRS sending our clients bills for adjustments to their tax returns that were not entirely correct. We have written letters to the IRS, attaching documents to dispute the assessments, but the IRS is currently about five to six months backlogged in processing their correspondence. Meanwhile second and third bills are being sent to taxpayers with additional penalties and interest that could have been eliminated if they would simply process our letters. Unbelievable!
In the past we had the option of calling the IRS and faxing their representatives our documents ….no longer an option. Most IRS personnel are working from home now and cannot receive faxes. Many are no longer answering their phones. A recently released report by the Taxpayer Advocate’s office reported that only 3 percent of all calls to the IRS this past tax season were answered by a human. The other 97 percent were met with the all too familiar message that “due to peak call volume” the caller needed to call back at another time.
If we do reach a human when we call the IRS, we must prove to them we are authorized to discuss a taxpayer’s information with them. Our firm does this by faxing the IRS a signed power of attorney. The problem is the IRS is taking as long as a month to process the power of attorney forms we submit. Prior to COVID this process used to take a few hours.
We currently have four clients that have pending settlement offers with the IRS. These offers are known as “Offers in Compromise.” It is a wonderful program that allows taxpayers to get a new start by settling their balance with a negotiated reduced amount. These offers are taking over a year to process. I received a call last week from a client whose spouse had their paycheck garnished for prior year taxes owed. This client has had an offer pending for over a year! This is so unfair.
The IRS has had additional programs given to them to administer without increasing their workforce. In 2020 and 2021 three rounds of COVID stimulus checks were piled on. The IRS workforce is mostly working from home with limited access to databases and documents they would normally have available to them.
This situation is difficult. Please know we are doing our best to assist our clients during this crisis. We have written many letters that have not been processed and left even more messages that have not been returned. Your patience and understanding are very much appreciated.
Category Archives: Business Accounting
Santa’s Tax Situation Doesn’t Look Good!
If Santa needs a good CPA, he can find one in Jefferson, Maryland. Continue Reading
New Tax Laws for 2019!
This week I attended a two-day seminar on the new tax laws taking effect for 2019. The sheer number of changes is a little overwhelming. There are new reporting requirements for anyone who files Head of Household status. There is also an expanded due diligence checklist for any taxpayer that claims college expenses, the child… Continue Reading
Recording Donated Assets on your Books
Business owners record the cost of their physical assets on their books for a variety of reasons. The cost is important for income tax reasons since it is depreciated or deducted over a period of years. In Maryland, the assets of a business, and their costs or values, are reported annually on a Personal Property… Continue Reading
A Lack of Documentation can Cost You!
I met with a number of clients in the last couple of months who are very tech savvy and utilize a lot of the current technology available in running their businesses. Some deposit their customer checks by taking pictures of them with their phones. Others track their auto mileage by using the GPS app on… Continue Reading
Employing your child could be a win-win strategy
I met with one of my higher income clients this morning to discuss tax saving ideas. She operates a business out of her home to keep the overhead low. This year her income has increased about 20 percent and it looks like the growth will continue for the foreseeable future. We discussed a number of… Continue Reading
The Balance Sheet: The Unappreciated Statement
I have prepared financial statements for business owners throughout my entire career. A standard set of financial statements can be a wealth of information when it comes to operating a successful business. Too often the value of these tools is unappreciated by the business owner. Many times, their attention goes straight to the bottom line… Continue Reading
Don’t be Afraid to Raise your Prices!
This morning I met with a small contractor to review his year to date results of operations and compute the income tax he should submit by Sept. 15th. During the meeting he mentioned how busy he has been and that he is turning down offers to look at more work because he is already scheduled… Continue Reading
Tax-Related Telephone Scams
This week our area has been hit with an increased number of tax-related scam telephone calls. They are starting to sound much more realistic than similar scams in prior years. Usually the caller will identify themselves as a member of an enforcement division of either the IRS or Maryland State Police. They will inform you… Continue Reading
We can’t do it all…well
As business owners, we do our best to minimize our expenses while trying to maximize our revenues. Too often we become revenue-focused and pour the majority of our time and energy in to producing more revenue. This naturally leads to a decline in the aspects of our business that don’t directly produce the revenue. We… Continue Reading
IRS to Audit More Small Businesses!
The 2018 IRS Forum was a valuable source of information regarding the upcoming tax filing season. Among the many tidbits I gleaned were issues of IRS concern relating to small businesses. The IRS has announced they are going to scrutinize such things as: personal use of the business assets such as cell phones and laptops,… Continue Reading
Many New Tax Law Changes are Just Around the Corner!
Last week I spent three fantastic days at the IRS Nationwide Tax Forum! Many new tax laws and changes to the tax forms are slated for the next filing season. The amount of new information, procedural changes and tax form modifications discussed was at times, overwhelming. The increasing number and types of new tax scams… Continue Reading
New Tax Warning to Employees
Employees beware! The new withholding tax tables that have been published may cause your employers to under withhold the federal tax from your paychecks. If your employer utilizes these new tables, they are doing nothing wrong. However, the tables incorporate the tax cuts under the new law by lowering the withholding amounts. While this gives… Continue Reading
Hired Guns
When you operate a seasonal business, your workload is concentrated into a few months out of the year. The very nature of this beast makes it difficult to assemble a talented workforce. Most experienced employees desire year-round income. This limits the business to finding seasonal help. Every year we experience a backlog at the review… Continue Reading
Good Employees Make a Big Difference!
Most small businesses don’t have employees. The owners perform all the duties of the business. However, that type of business model restricts growth. If you want a business to grow, the owner must be willing to delegate most non-essential functions to an employee. A good employee who competently handles the clerical and administrative functions can… Continue Reading
Employees’ Business Expenses Must be Documented
A deduction is available for money an employee spends to perform their duties in the course of their employment if they are unreimbursed by their employer. This includes mileage, licenses, union dues, education and out of pocket expenses. The expenses must be incurred as a condition of employment or utilized in the performance of the… Continue Reading
Business Tip: Customers Don’t Want Equal Treatment
The advice we give our clients is personalized to their situation and circumstances. No two clients are the same. We may recommend one course of action for you and the opposite for your neighbor. The key is to listen to your client. Learn their goals and question any limitations to achieving them. Customers don’t want… Continue Reading
Beware of Tax-Related Identity Theft Scams
Deceitful communications come via phone, email, postal mail, and sometimes even a knock on your door. It’s important to know that the IRS does occasionally contact taxpayers, but when they do, it’s most often by mail. Sometimes the IRS needs to verify a taxpayer’s identity and will do so by sending a Letter 5071C. This… Continue Reading
Do You Need to File a Form 1099 Misc?
A Form 1099 Misc should be filed for every unincorporated vendor or contractor who you paid $600 or more during the calendar year 2017. The amounts to be reported are for services only. If you paid someone for products and services, only the labor charges are to be reported in box 7 of Form 1099… Continue Reading
Due Date for Payroll Reporting
The due date for filing your form W2’s with the Social Security Administration is January 31, 2018. Extensions to file these forms are much more difficult to get this year. The IRS is only granting extensions in cases of extreme hardship or uncontrollable circumstances. The penalties for failure to file the forms on time have… Continue Reading