![]() ![]() Corresponding Forms 941 must be processed before Forms 941-X can be processed. While most ERC claims are legitimate, a significant percentage are "along the spectrum of very aggressive to fraudulent." As a result, ERC promoter claims involving the ERC are on the most recent IRS "Dirty Dozen" list of tax scams.Ĭurrently, the ERC is claimed on Form 941-X, which is an amended payroll tax return. On the business side, a large portion of the delay in processing amended returns is attributable to ERC claims. As of the end of the filing season, the IRS was taking about seven months to process amended returns. This creates delays in both data intake and issuing refunds. Although the IRS accepts amended individual income tax returns (1040-X) electronically, it still relies on manual processing for these returns. Amended ReturnsĪlso causing a delay? Amended returns. And there's an ambitious timeline: the IRS aims to develop the capability to scan all paper-filed Forms 1040 by the 2024 filing season. According to the NTA, the IRS is running pilot programs to test automating the processing of paper-filed tax returns. But the IRS isn't yet scanning machine-read paper-filed returns, which means that IRS employees must still manually enter data from paper-filed returns into IRS systems. The IRS received 17 million paper-filed Forms 1040 in 2021, 14 million paper-filed Forms 1040 in 2022, and as of April 21, 2023, over five million paper-filed Forms 1040 in 2023. During the pandemic, more than 90% of taxpayers e-filed their returns, and the IRS largely processed those e-filed returns without errors and issued refunds timely.īut since most taxpayers are e-filing, that means just a few returns aren’t getting processed, right? Not exactly. ![]() From December 2022 through the filing season, the inventory of amended tax returns more than doubled from 1.5 million to 3.4 million, and the inventory of taxpayer responses to IRS notices and other AM cases awaiting processing increased from 4.9 million to 5.0 million.Ĭollins reports that processing delays primarily involve paper-filed tax returns. So while the LOS rates were terrific, they resulted in more delays in processing paper correspondence. That means that during the time they were assigned to answer the phones, they were neither assisting taxpayers on the phone nor processing amended tax returns and taxpayer correspondence. Assigning representatives to phone lines means they cannot perform other tasks-even when phones aren't ringing.
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