From stimulus checks to child tax credits, the Internal Revenue Service (IRS) has had a lot of added paperwork on its plate amid the last two years of the COVID pandemic. While tax season is always a major part of the agency's job, additional work on top of budget cuts left the IRS closing last year's season with an unprecedented 35 million unprocessed returns, per The Washington Post. As we enter a new year and a new tax season, a snowball effect is set to occur, with staff shortages and unprocessed returns looming over the agency. In order to get your tax return on time, the IRS has just warned against one practice this year. Read on to find out what the agency says you should not do in 2022.
The IRS says you should not file a paper tax return this year.
Just ahead of the 2022 tax filing season, the IRS is warning taxpayers about how they should and shouldn't be doing their taxes this year. According to the agency, you should be using tax preparation software or a trusted tax professional to file your taxes electronically this year—especially if you're looking to get your return back in a reasonable amount of time.
"There are some simple steps people can take to make sure they avoid delays and receive a quick refund," IRS Commissioner Chuck Rettig said in a Jan. 13 statement. "It's critical this year to avoid a paper tax return whenever possible and file electronically with direct deposit. And it's more important than ever to make sure you're filing an accurate tax return."
Experts say the agency is in "crisis" after a tough tax year.
On Jan. 12, the National Taxpayer Advocate released a report to Congress about the processing issues faced by the IRS last year. According to the report, the agency still had 6 million unprocessed individual tax returns and 2.3 million unprocessed amended individual tax returns as of Dec. 2021.
"There is no way to sugarcoat the year 2021 in tax administration: From the perspective of tens of millions of taxpayers, it was horrendous," Erin Collins, the head of the Taxpayer Advocate who works as an independent watchdog for the IRS, said in the report. "The IRS is in crisis and needs to apply resources to its core mission—processing returns and paying the corresponding refunds."
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Processing delays might be even worse this year.
The IRS' issues are set to roll over into the new tax season. Many taxpayers were left without refunds for up to nine months after filing last year. But according to Collins, processing delays could be "as bad, and potentially worse" this year, per CNN.
"Millions of taxpayers rely on the benefits from these programs to pay their basic living expenses, and when refunds are substantially delayed, the financial impact can range from mild inconvenience to severe financial hardship," Collins said in the National Taxpayer Advocate report.
And the tax expert specifically warned about paper returns and how they could exacerbate the major issues that the IRS is already facing. "I am deeply concerned about the upcoming filing season," Collins told CNBC. "Paper is the IRS' Kryptonite, and the agency is still buried in it."
You should file your tax return as soon as possible.
The IRS is starting the 2022 tax season two weeks earlier this year. According to the agency, most taxpayers will be required to submit their 2021 tax returns by April 18, but they can start preparing their return to file as early as Jan. 14. And the sooner you file, the more likely you are to avoid significant processing delays that are seemingly inevitable this year. The agency says it anticipates that most taxpayers will receive their refund within 21 days of filing, if they file electronically, choose direct deposit, and have no issues with their tax return.
"Planning for the nation's filing season process is a massive undertaking, and IRS teams have been working non-stop these past several months to prepare … The pandemic continues to create challenges," Rettig said. "In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees, and for me. IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us."