Brenneman had filed an amendment to her 2018 taxes via snail mail, along with a $108 check to pay the balance due, in early March 2020, when the virus that causes COVID-19 was first spreading across America. A few weeks later, as the nation went into lockdown, Congress tasked the IRS with delivering $270 billion in economic impact payments. As the agency struggled to administer the unprecedented program during a pandemic, Brenneman’s tiny tax payment may have gotten lost in the shuffle.
Her check was cashed swiftly, but in June, she got an IRS notice that was dated from April saying that she owed them money.
“My heart dropped,’ Brenneman said. “I’m like, ‘Oh my gosh, what are they coming at me for?’ And then when I realized it was for this payment that they have, I figured, ‘We’ll get it straightened out.’ But then the letters kept coming and coming.”
Brenneman is among millions of taxpayers whose paperwork has been snarled in the IRS backlog that began with last spring’s stimulus checks. The unprecedented burdens placed on the IRS in the past year, combined with a decade of declining funding and a paralyzing pandemic, have given rise to a cascading set of taxpayer headaches. Tax professionals say that for many functions, the IRS has gotten so sclerotic that all they can do is tell their clients to wait and hope their situations get straightened out eventually.
“If you got a penalty or notice, and you’re trying to resolve the issue, it’s literally mission impossible to do that over the phone, even as a practitioner,” said Mishkin Santa, a principal with the Wolf Group, which often works on U.S. tax issues with foreign nationals. “The processing systems of the IRS are failing our taxpayers.”
The IRS logjam is particularly difficult for low-income people who rely on tax refunds and stimulus checks. As of Jan. 29, the agency still hadn’t processed 6.7 million individual returns for the 2019 tax year. That’s a problem for anyone expecting refunds, which will be delayed. But it also means a long wait for the second stimulus payment of $600, which can’t be sent automatically unless a 2019 tax return has been processed. On Jan. 30, the IRS was still processing 4.6 million cases that involve amended returns and other special requests. Meanwhile, low-income filers have less access to help; as of Feb. 1, 78 out of the IRS’ 358 taxpayer assistance centers were closed.