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Good news and bad news for tax season

The Internal Revenue Service (IRS) has announced that tax season will start early this year, with Jan. 24 designated as the first day they will start accepting 2021 returns for individual filers. Last year the agency did not begin accepting or processing 2020 returns until Feb. 12. The bad news? As with just about everything else, the COVID-19 pandemic will contribute to delays in processing tax returns and refunds.

On its website, the IRS is warning of delays and suggests that filers submit their returns as early as possible, and online rather than through the mail. In an interview with NBC News, Erin M. Collins, the agency’s national taxpayer advocate, explained that paper returns are harder to process because IRS employees must physically be in the building – and following social distance measures – to process them. “Paper is the IRS’s kryptonite, and the agency is still buried in it,” she said. Pair that with the historic mail slowdowns that are making it more difficult to send and receive mail, and filing online just makes more sense.

Collins released her Annual Report to Congress last week, and it highlighted some significant challenges being faced by the IRS this year:

  • Delays: “During 2021, tens of millions of taxpayers were forced to wait extraordinarily long periods of time for the IRS to process their tax returns, issue their refunds, and address their correspondence.”
  • Staffing: “The IRS’s budget was reduced by nearly 20 percent in inflation-adjusted dollars from 2010 to 2021. From 2010 to 2020, the IRS lost over 33,000 full-time employees. Over the past year, the IRS faced several additional staffing-related challenges.”
  • Customer service: “IRS phone service has gone from bad to worse during COVID-19, with calls reaching an all-time high and Level of Service falling to an all-time low. This inadequate phone service disadvantages taxpayers and harms tax compliance.”

The IRS also warns of phishing and other tax fraud scams that are becoming increasingly more common. Often these scams take the form of someone impersonating a federal tax agent via a phone call or email. They may claim you have an unpaid tax bill or are owed a refund. These messages are often of an urgent nature and may threaten you with additional fines, arrest, or license suspension – usually in an attempt to steal your financial or personal information. An additional threat of the emails is that they often include a link or an attachment that could deliver malicious malware to your device. According to the IRS website, “The IRS doesn’t initiate contact with taxpayers by email, text messages, or social media channels to request personal or financial information.” They typically do so through regular mail delivered by the United States Postal Service.

The best advice for filing your taxes is to do it early and online. “There are some simple steps people can take to make sure they avoid delays and receive a quick refund,” says IRS Commissioner Chuck Rettig. “It’s critical this year to avoid a paper tax return whenever possible and file electronically with direct deposit. And it’s more important than ever to make sure you’re filing an accurate tax return. The IRS urges people to review some straightforward tips that can help them avoid problems and get their tax refunds quickly.”

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