The IRS is Broken!!
What is the IRS situation currently?
I usually don’t use this forum to issue complaints unless I have a possible solution. Nobody likes whining and my readers are more interested in solving problems vs belly-aching about them. But, I am going to make an exception this time, since I am declaring today that the IRS Is Officially Broken and that I have no solution. That, plus I am po’d.
Let me explain:
For the first time in as long as I can remember the IRS, (actually the Department Of The Treasury) owes me money for my 2020 Tax Return. My accountant e-filed it on May 17, 2021, the COVID extended due date. They owe me $8,600 and have owed it to me for exactly five months and one day as of the date of this post. Of course, if I ever fail to pay my estimated taxes on-time, penalties and interest apply. When they fail to pay up, I get blocked in every attempt to communicate with them over “Where’s My Refund”.
Me as tax filer:
COVID cost me big income in 2020. No use complaining. I file a federal 1040 with a bunch of schedules and 2 states as well. My filing pattern, (except my 2020 loss), the K-1’s, 1099’s etc. is the same, so I shouldn’t be under any unusual scrutiny. Not only that, but my understanding is that there are another 14 million unprocessed taxpayer returns as of the end of September. That’s me and 13,999,999 others in the same boat. Plus, October 15th is the 2020 filing date for folks that extended. Who knows how many more just hit the IRS systems?
What is going on with the IRS?
The fast answer is they are backlogged….seriously backlogged. With COVID stimulus payments, new child tax credits, a long time out during the early stages of the pandemic, 6’ distancing requirements at the office and a completely busted computer system they are whacked out, even by federal government standards. That, plus their their own 2000+ page boat anchor tax code that weighs them down isn’t helping either.
At one level I am sympathetic to the hard working individuals at the Service, but at another level, fiscal responsibility, I don’t give a damn. If I miss an estimated tax payment by even one day I get whacked for penalties and interest. They are 5 months and counting for my refund and have completely checked out of the communication lines. Just try calling them and connecting with a human being.
What are they doing/not doing?
The first thing (and why I am the most po’d) is that they are not being truthful and forthcoming and it’s the first time I can honestly remember that. Unlike many tax payers who just hate them because they exist, I have always been very much the opposite, but now they are just not living up to the standards they say they represent - all the while insisting that taxpayers do exactly that.
The BS on their website regarding refunds says that they “usually process correctly e-filed returns in 21 days”. Let me think for a second on how long it’s been for me and 14 million others …. oh yeah, I have that answer! It’s been 154 days as of today! That means I, and the group of 14 million collectively, are getting the run around.
They have set up a automated phone pass-through connection for certain tax matters only, where you can actually talk with someone. Guess what? It is an outsourced third-party company and after you wait 45 minutes the first thing they tell you is they cannot discuss your individual tax return questions. Why? Because they are not the IRS and you can only talk with the IRS for your individual tax return details. But wait… you can’t talk to anyone at the IRS! It’s a circular run around and a huge time waster.
Next, there is an actual weblink that functions: https://www.irs.gov/refunds where you can check on your refund status, but it is functionally limited to telling you basically nothing - “Your tax return is still being processed”. You can dig deeper on Tax Topic 152 and you get the same old line about how they usually process correctly e-filed returns in 21 days - but clearly, not to the tune of 14 million American filers to-date.
Granted, some returns need to be looked at and reviewed for accuracy, but somehow I don’t think that is the fundamental problem in this case. What is?
Lack of transparency:
A few months ago I wrote a very fair and entirely favorable post on my experience with the IRS. They have always been fair to me in the past and I have 5 land development company audits and 1 personal audit under my belt (with no scars) as evidence.
See it here:
The IRS and Real Estate: The IRS and Real Estate — Land Development Realities
Right now the IRS is completely shattered and I encourage them to start being forthcoming and truthful. If they can’t process or can’t pay - just say so! Twenty one days…are you kidding?
Is this the end of the world for me? No, but it might be close to that for others. A guy I know has been waiting for his $1,000 refund since April 15th. His wife recently passed away and his dog (the only living thing left that he loves) needs an expensive procedure of some kind. This guy really needs his refund and he filed a month ahead of me. Still waiting…
To wrap up, I took a class in college where I actually remember something useful. I needed some humanities credits so I took a cultural anthropology class. I remember the professor making this point - “historically, all great cultures and societies have prospered until they reached a limiting factor”. If you look at the Roman Empire, ancient Greece, or the Asian dynasties before that, it’s always been the same.
Right now, I am wondering if America has reached that dubious “limiting factor”?
Also, there is no subtle political statement here. Sadly, many federal systems have been steadily eroding through multiple administrations for decades. Time to stop our little political civil war we are indulging ourselves in right now and get to work in fixing things together…seems to me anyway.
Good luck and stay safe!
Contact me at: ldr@landdevelopmentrealities.com
