National Taxpayer Advocate Erin Collins Says COVID-19 Has Introduced New Challenges

Chris Gaetano
Published Date:
Jun 29, 2020
GettyImages-494777797 Erin Collins IRS Taxpayer Advocate KPMG (Blog)

Erin Collins, the national taxpayer advocate who replaced Nina Olson, warned in her first report to Congress of new challenges taxpayers face due to the global pandemic. These challenges arise from both the economic impacts of the virus itself and the government's massive aid response.

For instance, she noted that there is a sizable number of taxpayers who face significant delays when it comes to getting refunds they're owed, either because they filed paper returns that can't be processed, as the returns sit in mail facilities (there are 4.7 million such returns in the backlog) or because the taxpayers had been mistakenly flagged as possible identity thieves. At the same time, the IRS shutdown of many of its support options in the wake of the pandemic means that confused taxpayers are also having difficulty getting help. She also referenced the ongoing problem of people receiving past due notices that are no longer valid due to extensions that are not reflecting in the notices because of mailing delays.

Her report also pointed to the large number of problems with the CARES Act implementation. Economic impact payments (EIP) for some might not arrive until next year, she said, as "the IRS has taken the position that most taxpayers who did not receive their full payments must wait until they file their 2020 income tax returns to claim the amounts as credits against their 2020 tax liabilities, even though there is no legal constraint on the IRS’s ability to issue additional EIP amounts as advance refunds during 2020." She also said that employers are struggling to determine whether they are eligible for the Employee Retention Credit, and while the IRS has issued guidance on this question, there remain several key areas where further clarity is needed. She said there is also a lot of confusion over how to follow the new net operating loss rules.

At the same time, she praised the IRS's work on the Taxpayer's First Act, enacted a year ago, which she said constitutes "the most far-reaching revisions to tax administration since the IRS Restructuring and Reform Act of 1998." The report said that the service has implemented over two dozen provisions in the act, and has taken steps to receive input from taxpayers, practitioners and the Taxpayer Advocate Service (TAS).

Outside of these areas, the report said that the TAS, during the upcoming fiscal year, plans to focus on working with the IRS to provide taxpayers who have limited English proficiency with meaningful access to tax products and services; improving the clarity and content of IRS notices and correspondence; improving service to, and communication with, taxpayers in rural and other communities that lack high-speed internet access; and working with the IRS to refine its screening filters so that fewer legitimate returns are flagged as potentially fraudulent and cause refund delays for affected taxpayers.

Finally, while the taxpayer advocate usually reviews the most recent filing season, the pandemic makes it difficult to compare this year to previous ones and so said, "[A]n assessment of the filing season is necessarily incomplete." The report suggested that the taxpayer advocate might release a more detailed analysis sometime in the future.

“On March 30, 2020, I had the honor and privilege of being sworn in as the third National Taxpayer Advocate,” Collins wrote. “Starting in the midst of a pandemic and witnessing IRS offices closing one by one was not the way I envisioned my role when I accepted the position ... but there also has been a silver lining in this experience. As I have participated in conference calls with members of my leadership team, TAS employees, and the IRS’s COVID-19 response team, I have been extraordinarily impressed by their commitment and focus on the health and safety of all employees during this pandemic, while still doing as much as possible to assist taxpayers.”

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