IRS Computer Generated Notices – No End in Sight Anytime Soon

The IRS has received requests from 200 members of Congress and numerous practitioners to stop automated notices. However, in a statement on its website on January 27, 2022, the IRS said it “will be very difficult…due to technology limitations.” “With an outdated technological ecosystem, these are changes that cannot be made as efficiently as they should be – and that is part of the reason why investing in IRS IT modernization is so important”. 

The IRS said it has been working on relief for taxpayers and professionals, implementing additional ways to avoid confusion and provide relief during the pandemic. But it entered the pandemic without the funding that it needs. Despite the pandemic and its limited resources, the IRS said it has aggressively pursued many options to better serve taxpayers this filing season, including overtime by its employees, the redeployment of employees between functions, transfer of inventories among posts of duty, deployment of experienced teams – all aimed at returning its processing and correspondence inventories to a healthy level and improving its services to taxpayers and professionals.

The IRS said it has also developed and deployed important technology allowing employees to review and process tax returns filed with errors at many times the rate in the past, but they are not where they want to be at present.

As part of its ongoing effort and balancing the importance of protecting the interests of tax administration, the IRS has also been taking steps to modify its operations and provide additional taxpayer relief. These efforts include suspending automated notices and related actions.  It is looking at the suggestions it has received and will continue to modify and adjust its efforts.

For example, it has already suspended notices where it has the taxpayer’s payments but no record of their tax return being filed. In many cases, the tax return is part of their “paper inventory” and simply hasn’t been processed. However, many IRS notices are statutorily required to be issued within a certain timeframe to be legally valid. This means they must be sent, absent congressional action.

Making significant operational changes to its systems, including stopping certain notices from being printed and mailed, will require programming and other operational changes. With an outdated technological ecosystem, those changes cannot be made as efficiently as they should be. It stated that it will do what it can to help taxpayers, but within the constraints of an outdated system. A seemingly simple modification could run the risk of jeopardizing the overall operating system critical to the current tax season when it anticipates receiving more than 160 million returns.

IRS Commissioner Chuck Rettig said “We appreciate the patience and understanding of everyone and the many expressions of appreciation for the efforts of our employees, who have continued to step forward while sharing the same health and safety concerns of others. We are continuing to balance multiple unprecedented demands, including starting the filing season as well as continuing to work on important new tax provisions. The IRS has been operating in an ‘all hands-on deck’ approach, leaving nothing off the table for consideration to improve overall service. We will rapidly adapt to changing circumstances, when appropriate to do so.”