Important Tips for Navigating a Tricky Tax Season in 2022
With the possible exception of a few extra earnest CPAs, nobody gets really excited when tax time rolls around. Tracking down receipts, figuring out whether it makes sense to itemize your deductions, and separating your business expenses from your personal finances can really drag you down, even in the best of years. And by all accounts, it’s pretty clear that this year is definitely not the best of years!
If you’ve had any reason to contact the IRS in recent months, you probably already know that it’s almost impossible to get a response. And if your news feed serves up lots of tax-related info (you know our CPA army is dialed into all the IRS news) you’ve probably seen headlines for weeks detailing the woes that are plaguing the IRS. So what’s going on over at 1111 Constitution Avenue NW (aka, ground zero for the Internal Revenue Service), and what can you do to avoid getting stuck in an IRS quagmire? Read on for the skinny.
What’s the Issue at the IRS This Year?
The Internal Revenue Service has never been a bastion of efficiency, clarity, and speedy responsiveness. But this year the agency is so backlogged, the news just can’t keep up with the bad news! Whether it’s the agency itself reporting in June that it ended the 2021 tax-filing season with over 35 million unprocessed tax returns, or the recent news that as of January 2022 over 11 million of those old returns are still languishing unprocessed, there seems to be no good news coming out of the IRS these days.
The basic issue revolves around staffing and funding. The IRS has been struggling to keep up for years as it deals with outdated computer systems and staffing and budgetary issues. When the government partially shut down between December 2018 and January 2019, all of the agency’s problems became more acute. The IRS ended the 2019 tax season at least a year behind, and then the pandemic hit. Much of the tax processing work cannot be done remotely, so Covid took the agency from chronically playing catch up to catastrophically behind.
Major problems at the IRS
- Staffing Shortages: At the end of 2011, the IRS employed 94,000 employees. By the end of 2021, that number was down to 83,265. According to a recent Wall Street Journal report, the agency has advertised 5,000 job openings this season, but has only been able to fill less than 200 so far.
- Outdated Technology and Systems: The IRS uses a core processing system that was designed in the 1960s based on an antiquated programming language (Cobol) that is inconsistent with modern IT needs.
- Taxpayer Confusion and Correspondence Overload: Even as the IRS struggles to fill open positions, the amount of correspondence they are handling each day continues to explode. A complicated tax code, coupled with new stimulus programs, has led taxpayers to seek guidance from the IRS at an exponential rate. IRS Commissioner Charles Rettig recently told Congress that the IRS receives up to 1.5 million pieces of mail each week and receives up to 1,500 calls per second during tax season. Last year, only 3% of taxpayers seeking help with their 1040s reached a representative.
Big Trouble at the IRS—What Does it Mean for Me?
The issues at the IRS mean that if you have any issues that require communication with the agency, you’re likely to run into big trouble. Returns are likely to be delayed, communications left unanswered, and problems that start out small could compound if taxes and fines go unpaid.
How Can I Minimize Tax Problems This Year?
The biggest thing you can do to avoid this dumpster fire is to eliminate any need to communicate with the IRS. That means finding an alternate source for reliable information and help, and making sure that your tax returns are accurate, complete, and on time. PRIME is here to help on both fronts. You can check out our blog for information and timely tips about taxes here, and schedule a free consultation to talk about our tax planning services here. Our advisors are experts at finding every single deduction to make sure you keep more of what you earn. Even in a normal tax year, the service almost always pays for itself in the form of increased deductions. This year, having a trusted advisor by your side is literally priceless
To avoid tax trouble, make sure your returns are:
- ACCURATE: Watch out for simple mistakes that can end up derailing your return. We recently covered a few of the most common mistakes in this article.
- COMPLETE: Don’t leave anything blank! You’d be surprised how many returns the IRS is unable to process due to missing information.
- ON TIME: 2021 tax returns are due Monday, Apr 18, 2022. Be sure to submit your return or file for an extension by that date.
The good news is…there’s good news! PRIME advisors are just a click away to help ensure your small business taxes are accurate, complete, and on time. And the even better news? We’ll do your personal taxes as well, at no additional cost. Now more than ever, this is a service you just can’t afford to ignore!
Where Can I Find More Information About Filing My 2021 Taxes?
The best way to learn more about filing your taxes accurately and efficiently, while keeping more of your income and benefits, is to set up a free consultation with a PRIME Corporate Services advisor. Our experienced CPAs specialize in knowing all the details of the tax code and helping you keep every penny you can. And check out these resources for more tax tips and info: