Raising taxes amid inflation ‘not the answer’: Laffer
Former Reagan economic adviser Art Laffer suggests consequential fiscal policies are not being addressed correctly.
The tax deadline came and went, but the IRS has tens of millions of returns it has not yet processed due to a combination of COVID-19-related factors and late legislative changes made by Congress.
National Taxpayer Advocate Erin Collins explained in an interview with Yahoo Finance on Tuesday that the agency ended the tax season with an unusually high number of returns that required manual processing.
"We had new legislation that Congress enacted at the end of December – it was very favorable to taxpayers, but as a result the IRS couldn’t get their systems programmed quick enough that they could implement it through technology," Collins told Yahoo Finance. "So that required manual review of a lot of those returns."
Collins added that the changes allowed taxpayers to determine their Earned Income Tax Credit or Advanced Child Tax Credit using either 2019 or 2020 income, potentially increasing the benefit. But the change required IRS staffers to compare the returns, which she acknowledged was very "time consuming."
AVERAGE 2021 TAX REFUND UP FROM PAST 3 YEARS
Collins wrote in a report issued to Congress last week that the agency is facing a backlog of 35.3 million unprocessed individual and business returns, which represents a four-fold increase over the backlog it had at the end of the 2019 filing season.
Collins said on Tuesday that the returns requiring manual processing are roughly three-times higher than prior years.
The agency began the 2020 filing season with a backlog of more than 11 million unprocessed paper returns because of the pandemic’s impact on filing season last year.
In terms of when these taxpayers can expect to see those delayed refunds, Collins was not certain that they would be completed this summer.
"I do not have a crystal ball, I would like to tell you that absolutely this summer – I’m not that optimistic," Collins said.
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The good news is that most taxpayers – 95% of them – filed their returns electronically, and were therefore more likely to circumvent issues with backlogs and delays.
More than 148 million returns were filed this year and roughly 135.7 million have been processed.
The IRS also experienced an increase in tax return volume this year because individuals who aren’t normally required to file returns may have had to do so in order to claim their economic impact payments.
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