The IRS intends to stop fraudulent refunds before the money is sent out. It often delays the process for up to 14 days, imposes a temporary freeze for up to 70 days and if warranted, imposes a permanent freeze. As fraud has increased, so have the delays. Olsonâs figures show an increase of held returns at 72% over 2010. Of the taxpayers who sought IRS help and complained, 75% were in fact eligible for refunds.
Some claims are so fraudulent, the IRS doesnât even process them â it also doesnât bother to tell the taxpayer the return wasnât processed or âauto-voided.â Â Olson discovered (after the fact) that in fiscal 2011, 34,053 âfraudulentâ claims were from legitimate taxpayers and should have been processed.
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Correspondence exams Without IRS Tax Help
Non-exam Exams Creating IRS Tax Issues
The automation process has created a huge IRS tax problem in its correspondence. For example: In the last week of fiscal year 2011, Olson reports, the IRS had an inventory of 920,768 letters, up from 357,151 in the last week of fiscal year 2004; up almost three times the previous reporting!
The IRSâ budget for fiscal 2012 has been cut 2.5% andmay get cut further as pressure mounts to shrink the deficit. The Obama administration stoked the IRS fire to narrow the ever present tax gap; the difference between the amount of taxes reported and the amount oftaxes the government actually collects. An IRS report released last week shows the gap has grown to $450 billion dollars in 2006; up $105 billion from the last IRS study taken in 2001.
If you need tax debt relief and owe less than $10,000 in back taxes, have a clean IRS record and all your tax returns are filed – you or your tax professional can contact the IRS directly to arrange an IRS payment plan. If you owe $20,000 or more in back taxes: you will want to partner with a Certified Tax Resolution Specialist. This tax expert will save you time, money and sanity by becoming your tax advocate and dealing directly with the IRS on your behalf.
IRS Tax Problems Made Worse by Automation
Phone Service Not Offering Tax Help
IRS Helps Taxpayers by Delaying Refunds
If taxpayers receive an IRS letter for example, disputing a business expense or credit with instructions on what to do next and who to contact; seeking IRS tax help is often a road to nowhere. IRS correspondence is filled with incorrect contact information and with a long backlog, Olson worries that taxpayers may be subjected to extra tax assessment simply because the IRS hasnât processed their responses in time.
Not All Claims are Tax Fraud
Olson sees the following IRS problems as signs of trouble:
In fiscal 2010, the IRS made about 15 million contacts through mail notices with taxpayers that normal folks might regard as an examination or IRS tax audit. The IRS only considered 1.5 million of them to be exams leaving many taxpayers facing their IRS tax issues without the certain rights to appeal.
What worries taxpayer advocates, like Olson, are that previous attempts to close the tax gap relating to deficit pressures were not successful and often had the opposite effect. In the 1990âs, the IRS Restructuring and Reform Act of 1998, was enacted in response to what was seen as systemic abuses of taxpayer rights by the IRS. The result: Expansion of taxpayer protections and improved service, but a stifled IRS enforcement that gave rise to tax shelters and tax cheats.
While cutting government spending is often seen as a good thing, in the case of the IRS, it may be having the opposite effect. Forbes featured an article IRS Advocate: New Taxpayer Rights Crisis Is Brewing highlighting the release of a recent annual report to Congress by National Taxpayer Advocate, Nina E. Olson. Olson, knownfor being one of Washingtonâs most outspoken officials, states her concerns for current IRS policies that could harm taxpayers and her doubts that on a smaller, austere budget, the IRS is unable to âdo more with less.â
A TaxExpert Can Help with Tax Debt Relief
Wanting to get tax help from a âliveâ person at the IRS can be challenging. According to Olson, only 70% of calls to the IRS, in which the caller sought to speak to a human, were completed in fiscal 2011. The rest of the callers either got disconnected or hung up.