Challenges for Taxpayers Due to COVID Pandemic

Mid-March, the height of income tax season.  Add to that the COVID Pandemic and where does that leave taxpayers?  Well, first of all, tax season was extended to July 15 to provide additional time for taxpayers to file their taxes.  But, what about the people who filed their taxes before the pandemic was in full force or during our country’s shut-down?  What situations could be encountered?

If a paper return was filed and a refund due the taxpayer, processing had been suspended.  As the IRS slowly reopened, there were over 4.7 million paper returns waiting to be processed as of mid-May.  And, due to limited space, many returns were sitting in mail facilities. 

Some taxpayers whose returns were mistakenly flagged by IRS processing filters have experienced delays in receiving their refunds. All tax returns claiming refunds are passed through filters designed to detect identity theft and other types of refund fraud. It has been determined that some of these filters produced “false positive rates” of more than 50 percent (meaning that more than half the taxpayers whose returns are stopped by certain filters are entitled to the refunds they claimed). If you were one of these affected taxpayers, you may be asked to mail in documentation to substantiate your claims, but, the big question is whether the IRS has opened or processed many of the responses due to the backlog, delaying refunds.

While IRS systems prepared over 20 million notices during the pandemic, these notices could not be mailed due to closure of notice production centers. The IRS has now mailed these notices. However, some collection notices bear old dates and include response deadlines that often have passed. These notices with stale information can be confusing and of concern to taxpayers. 

If you have received a notice that is confusing or of concern, don’t hesitate to contact the IRS at the number contained in the notice to get assistance with regard to updated information. 


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About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Fiduciary Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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