There has been a recent barrage of IRS math error warnings, which have been confusing to taxpayers and difficult to resolve, according to financial experts.
The IRS sent out about 9 million such alerts from Jan. 1 to July 15, up from 628,997 in the same period last year, according to the Taxpayers’ Tax Service. . About 7.4 million were related to stimulus payments.
“Just solving the problem is a massive problem in itself,” said Larry Harris, a certified financial planner and director of tax services at Parsec Financial in Asheville, North Carolina.
As of Aug. 27, there was a delay of 9.2 million individual unprocessed returns, including failed 2020 applications, according to the IRS.
“One of the most important issues we have is the reconciliation of stimulus payments,” said Dan Herron, CFP and CPA based in San Luis Obispo, California, with Elemental Wealth Advisors.
With several payment options and limited tracking, there have been a lot of discrepancies between the IRS and taxpayers, he said.
Math error notices typically reflect an adjustment to someone’s account, such as a pending balance, or a smaller or larger refund. However, some warnings may lack important details.
“The IRS sends due balance notices without calculation or explanatory analysis,” Herron said.
Also, it can take hours to reach an IRS agent over the phone to find out the details, he said.
The IRS received more than 167 million phone calls during the 2021 filing season, but only 7% of taxpayers reached out to an agent, the Taxpayer Attorney Service reported.
It has also not been easy to contact the agency for tax professionals.
“They’re putting a lot of people at a disadvantage,” Herron said. “Especially those who can’t necessarily afford to have them [a tax professional] sit on the phone for hours at a time “.
The IRS did not immediately respond to a request for comment.
But the agency said it is correcting “significantly more errors in tax returns than in previous years,” in a Sept. 3 website update, and “will send an explanation to taxpayers.”
Since 2010, IRS funding has fallen 19%, according to the Center for Priority Budgets and Policies.
The agency laid off more than 33,378 full-time employees from 2010 to 2020, the IRS reported, and despite the increase in staff since 2019, the workforce is still below 2010 levels.
President Joe Biden proposed $ 80 billion in IRS funding over the next decade to combat tax evasion. Still, the measure is still in the process of transformation, as Congress fights for its $ 3.5 trillion budget plan.
The richest 1% of Americans could dodge up to $ 163 billion in taxes each year, according to a U.S. Treasury Department report released Tuesday.