According to the IRS, taxpayers who require additional time to file their tax returns can easily request a six-month extension, granting them until October 16th to submit their documents and avoid late filing penalties. The Treasury-measured IRS service levels had declined to as low as 15 percent in 2022. The wait times for calls have considerably decreased, dropping from 27 minutes to only 4 minutes, and the agency has responded to 2 million calls via live assistance.
Filers should anticipate that the initial round of funding, amounting to $80 billion, granted to the IRS in the Inflation Reduction Act will primarily lead to fundamental enhancements in refund delivery speeds and reduced waiting times when contacting the agency via phone. Throughout the pandemic, field office closures and remote work arrangements caused the accumulation of backlogs of unprocessed tax returns and unaddressed phone calls.
IRS simplifies tax filing for taxpayers
Nonetheless, service standards are currently improving, as the IRS intends to recruit 7,400 taxpayer service specialists, 1,500 auditors, 730 operational support workers, and 360 technologists this year. As of the beginning of this month, there were 2.26 million unprocessed individual returns, a decrease from the tens of millions during the pandemic’s peak.
To prevent processing delays, the IRS suggests that taxpayers file their taxes electronically, either through the Free File public-private partnership or commercial software programs. These options provide a superior user experience and additional support for a fee. The agency emphasizes the importance of reporting all taxable income and maintaining comprehensive annual records to ensure that previous years’ data can be readily accessed if required.
With the deadline for filing tax returns this year set for April 18th, it coincides with some significant structural changes in the U.S. tax administration, which have caused considerable disagreement between the Democrats and Republicans. However, ordinary taxpayers are unlikely to experience the effects of these changes this season, as they primarily impact audit rates and aid the government in collecting hundreds of billions of dollars in unpaid taxes annually.
Tax preparation experts in the private sector are advocating the utilization of certain publicly accessible tools provided by the IRS
While the IRS typically issues refunds within 21 days, filing via mail can prolong this process. Consequently, the vast majority of Americans file their taxes electronically to expedite the process.
Mimi Lewi, a senior tax compliance specialist at Empeon, a human resources software platform for payroll and hiring, advised taxpayers to double-check their 2023 withholdings using the IRS Withholding Estimator. This approach aids in avoiding unforeseen tax bills in the subsequent tax season, and it is critical to update one’s W-4 if necessary.
The typical tax refund is processed within 12 to 15 days
On Monday, the Treasury Department commended the IRS for its progress during this tax season. “Thanks to the Inflation Reduction Act resources, the IRS has delivered significantly enhanced service in Filing Season 2023. The agency has accomplished an 87 percent level of service, exceeding Secretary of the Treasury Janet L. Yellen’s target of 85 percent,” the Treasury stated.
Neighborhood Tax Assistance: Getting the Help You Need
Taxpayer Assistance Centers (TAC) are now available for in-person assistance in several states, including Wyoming, New York, Kansas, Texas, New Mexico, Virginia, Wisconsin, Pennsylvania, Washington, Colorado, Missouri, Tennessee, Maine, and New Jersey.
Additionally, a new TAC has opened in Greenville, Mississippi. Throughout the year, the IRS has gradually reopened TACs in various locations such as Casper, Wyo.; Binghamton, N.Y., West Nyack, N.Y.; Overland Park, Kan.; Longview, Texas; Santa Fe, N.M.; Queensbury, N.Y., Charlottesville, Va.; La Crosse, Wis., Cranberry Township, Pa.; Colorado Springs, Colo.; Joplin, Mo.; Jackson, Tenn.; Augusta, Maine; Bellingham, Wash., and Trenton, N.J.
Looking to the future
While the 2023 tax filing season has seen some improvements in service, there are bigger changes ahead in tax enforcement and administrative design. Tax lawyers are observing a trend towards greater centralization in the IRS’s data handling and decision-making related to enforcement. The agency will be dictating audit priorities centrally, based on data analytics, and field agents will act as conduits of this wisdom from Washington, according to Rob Kovacev, an attorney with Miller & Chevalier. He pointed out that the IRS’s new operating plan mentions “analytics” 149 times.