Could Changes be Coming to IRS Collection Practices?

February 7, 2022

The Internal Revenue Service ended 2021 with more than 10 million unprocessed tax returns from individuals and businesses. That is a huge concern as the 2022 tax season kicks into high gear. A bipartisan congressional group is calling for the IRS to adjust its collection practices –at least temporarily—until the agency can catch up.

More than 200 members of Congress signed a letter sent to Treasury Secretary Janet Yellen on January 26. The group asked the IRS to implement five immediate changes to address the backlog of returns at a time when millions of Americans are preparing and filing their 2021 federal tax returns. Their suggestions include:

• Halt automated collections from now until at least 90 days after April 18, 2022;
• Delay the collection process for filers until any active and pending penalty abatement requests have been processed;
• Streamline the reasonable cause penalty abatement process for taxpayers impacted by the COVID-19 pandemic without the need for written correspondence;
• Provide targeted tax penalty relief for taxpayers who paid at least 70 percent of the tax due for the 2020 and 2021 tax year; and
• Expedite processing of amended returns and provide TAS and congressional caseworkers with timely responses.

Following the publication of the letter, the IRS announced some initial relief. The agency said it would, “halt the use of automated notices in cases where a payment has been credited to a taxpayer but no tax return has been processed in an effort to help ease confusion related to a backlog in paper filings.”

The statement also added that a request to halt all notices would be impossible, pushing such action back to Congress.

“It is important to appreciate that many IRS notices are statutorily required to be issued within a certain timeframe to be legally valid,” the statement said.  “This means they must be sent, absent congressional action.”

It remains to be seen how the current backlog impacts taxpayers filing their 2021 returns. The IRS statement concluded with the promise that the agency “is continuing to assess other changes and system modifications it may be able to implement to assist taxpayers.”

Stay tuned.

Click here to read the full letter sent to Sec. Yellen regarding the proposed changes to IRS collections.

Click here to read the full statement from the IRS.