After the California Franchise Tax Board initially declared that the Middle Class Refund (also known as California inflation relief) is not taxable income and should not be included in the 2022 tax returns, the IRS issued similar guidance. There is currently uncertainty regarding the appropriate action to take if you have already filed a return and paid taxes on the Middle Class Refund. The IRS has announced that it will provide guidance on this matter at a later time. This disorder is just the latest in a series of challenges that the tax agency has confronted in recent years.
For example, in the year 2021, merely 11% of the consumer calls made to the IRS were attended by a representative, and it took an average of 251 days to respond to a mail inquiry. The IRS may now face a surge of new consumer inquiries, which could have been avoided. During his Senate Finance Committee confirmation hearing, Daniel Werfel acknowledged the pressing need for enhancements in consumer service as the nominated IRS commissioner. He emphasized that diligent and truthful taxpayers who require assistance in fulfilling their tax obligations are not receiving the necessary support. Werfel pledged to enhance the agency’s operations to address this issue.
The IRS may now face a surge of new consumer inquiries
The Inflation Reduction Act of the previous year granted an extra $79.6 million to aid the agency in upgrading and enhancing its services. Virginia officials shared the same opinion. According to the Department of Taxation, if you itemized your deductions, you might be obligated to report the rebate amount you received as income on your federal return. As a result, software developers had to dedicate time and resources to determine the appropriate course of action.
Furthermore, they now face an IRS ruling that contradicts their assumptions. The lack of guidance may result in further delays in resolving taxpayer accounts. That this was a well-known issue with far-reaching consequences for millions of taxpayers, tax return preparers (who still prepare the majority of federal income tax returns), and tax software developers.M
