Sens. Carper, Coons Join Colleagues in Call for IRS to Provide Penalty Relief for Taxpayers as IRS Faces Extensive Processing Backlogs

As of late December 2021, the IRS continued to have a backlog of 6 million individual income tax returns and 2.3 million amended individual tax returns. 

WILMINGTON, DEL. — U.S. Senators Tom Carper and Chris Coons (both D-Del.) yesterday joined Senators Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) and a bipartisan, bicameral group of their colleagues in sending a letter to Treasury Secretary Janet Yellen and Internal Revenue Service (IRS) Commissioner Charles Rettig calling on the U.S. Department of the Treasury and the IRS to provide penalty relief for taxpayers amid extensive, ongoing processing backlogs at the IRS.

“While the COVID-19 pandemic has strained every federal agency, the impact on the IRS has been particularly severe,” wrote the group of lawmakers. “As of December 23, 2021, the IRS continued to have a backlog of 6 million Forms 1040 (Individual Income Tax Returns) and 2.3 million amended individual tax returns. In addition, the IRS has 2 million Forms 941 (Employer Quarterly Tax Returns) that must be processed before the nearly 500,000 amended Forms 941 can be processed.”

The lawmakers noted the delayed processing of amended returns has been particularly devastating to small businesses whose applications for emergency loans from the Small Business Administration have been caught in limbo nearly two years after the COVID-19 pandemic began.

“Recognizing the extraordinary challenges of the COVID-19 pandemic, in addition to the IRS operating with antiquated technology and a constrained budget, we find the current situation alarming. We stand ready to support the IRS and look forward to hearing how we can help you address any obstacles facing the agency. However, we respectfully request the IRS consider the following measures to bring immediate relief to taxpayers, and reduce the backlog, during this tax filing season,” the lawmakers added. “…While we recognize no single action will alleviate issues that have resulted from difficulties at the IRS spanning administrations of both political parties, these steps would provide our constituents with greater certainty as we enter this year’s filing season.”

This effort is supported by the Tax Professionals United for Taxpayer Relief Coalition, which includes the American Institute of CPAs (AICPA), National Association of Enrolled Agents (NAEA), Padgett Business Services, H&R Block, Latino Tax Professional Association, National Association of Tax Professionals (NATP), National Society of Tax Professionals (NSTP), National Society of Accountants (NSA), National Society of Black Certified Public Accountants (NSBCPA), National Conference of CPA Practitioners (NCCPAP), Diverse Organization of Firms Advocacy Committee, National Association of Black Accountants (NABA), and Prosperity Now.

The House version of the letter was led by U.S. Representatives Linda Sánchez (D-Calif.-38), Darin LaHood (R-Ill.-18), Richard Neal (D-Mass.-01), Vern Buchanan (R-Fla.-16), Mike Thompson (D-Calif.-05), Tom Rice (R-S.C.-07), Bill Pascrell (D-N.J.-09), Drew Ferguson (R-Ga.-03), Judy Chu (D-Calif.-27), and Ron Estes (R-Kan.-04).

In addition to Sens. Carper, Coons, Menendez, and Cassidy, the letter was signed by Sens. Cory Booker (D-N.J.), Michael Bennet (D-Colo.), Richard Blumenthal (D-Conn.), Sherrod Brown (D-Ohio), Ben Cardin (D-Md.), Catherine Cortez Masto (D-Nev.), Tammy Duckworth (D-Ill.), Kirsten Gillibrand (D-N.Y.), Tim Kaine (D-Va.), Amy Klobuchar (D-Minn.), Patrick Leahy (D-Vt.), Cynthia Lummis (R-Wyo.), Joe Manchin (D-W.Va.), Jeff Merkley (D-Ore.), Chris Murphy (D-Conn.), Jacky Rosen (D-Nev.), Debbie Stabenow (D-Mich.), Chris Van Hollen (D-Md.), Mark Warner (D-Va.), Raphael Warnock (D-Ga.), and Ron Wyden (D-Ore.).

Full text of the letter can be found HERE and below.

Dear Secretary Yellen and Commissioner Rettig,

As the 2022 tax filing season fast approaches, we are concerned about the unprecedented challenges facing the Internal Revenue Service (IRS) and the ongoing impact on our constituents. While the COVID-19 pandemic has strained every federal agency, the impact on the IRS has been particularly severe. As of December 23, 2021, the IRS continued to have a backlog of 6 million Forms 1040 (Individual Income Tax Returns) and 2.3 million amended individual tax returns.  In addition, the IRS has 2 million Forms 941 (Employer Quarterly Tax Returns) that must be processed before the nearly 500,000 amended Forms 941 can be processed.

In many cases, the delayed processing of amended returns has been devastating to small businesses in our communities whose applications for emergency loans from the Small Business Administration have been caught in limbo nearly two years after the COVID-19 pandemic began. The situation has deteriorated to a point that the Taxpayer Advocate Service (TAS) will no longer accept cases solely involving the processing of amended returns. This has made it impossible for frustrated taxpayers to find any help.  When our constituents cannot get assistance from the IRS and TAS, they contact us, and we have our hands tied at this point as well. 

Recognizing the extraordinary challenges of the COVID-19 pandemic, in addition to the IRS operating with antiquated technology and a constrained budget, we find the current situation alarming. We stand ready to support the IRS and look forward to hearing how we can help you address any obstacles facing the agency. However, we respectfully request the IRS consider the following measures to bring immediate relief to taxpayers, and reduce the backlog, during this tax filing season:

• Halt automated collections from now until at least 90 days after April 18, 2022;
• Delay the collection process for filers until any active and pending penalty abatement requests have been processed;
• Streamline the reasonable cause penalty abatement process for taxpayers impacted by the COVID-19 pandemic without the need for written correspondence; 
• Provide targeted tax penalty relief for taxpayers who paid at least 70 percent of the tax due for the 2020 and 2021 tax year; and
• Expedite processing of amended returns and provide TAS and congressional caseworkers with timely responses.

While we recognize no single action will alleviate issues that have resulted from difficulties at the IRS spanning administrations of both political parties, these steps would provide our constituents with greater certainty as we enter this year’s filing season. Thank you for your attention to this urgent matter and the dedication of the IRS and Treasury personnel to improving the filing process in these extraordinary times.

Sincerely, 

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