IRS Asks for Patience

The IRS issued an “Operations Resumption Statement” last week on its website after opening its doors back up on October 17th.  The IRS wants taxpayers and tax professionals to know that that they are aware of the backlog that has resulted from the 16-day shutdown:

At this point, we know we received a large amount of correspondence during the closure. We know there will be a substantial increase in demand for our phone services and many other operations

In other words, “stop reminding us about the delays and long hold times; we know we have problems right now.”

The IRS also acknowledged that it will take time for the call centers and walk-in assistance centers to ramp up to normal levels of operation.  Since they are still assessing the damage caused by the government shutdown, there is no way to estimate how long the ramping up process will take.  I would guess that things will be slow for several weeks, perhaps even a couple months.  This is based on my experience as a tax attorney over the years.  Even one day off at the call centers often has residual effects on hold times and mail processing times.  A 16-day shutdown is unprecedented and we have no way of knowing when the IRS will be back to “normal” at this point.

In light of the enormous backlog that the IRS has committed to focus on over the next several weeks, the IRS has asked that taxpayers and tax professionals delay or limit their contacts with the IRS except in urgent situations.  Of course, after 16 days many of the issues that could have been considered non-urgent have now been upgraded to higher levels of urgency.  And I think the IRS realizes that too.  They just ask for our patience right now.  Ask anyone who deals with the IRS on a regular basis — if there is anything we know, it’s patience.

Filing OIC? Take a Number.

The IRS has done quite a bit to promote the Offer in Compromise program during the economic downturn of the last few years, and the message is coming across loud and clear.  That’s the good news.  The bad news is the IRS can’t seem to handle the onslaught of new offers.

The Offer in Compromise (OIC) is a program whereby the IRS accepts an amount that is less than the tax liability to forever settle what is owed.  The rationale behind the OIC program is this: if the taxpayer can prove that the amount offered is the absolute most he/she can pay and the IRS will most likely never be able to collect the full tax debt, it is better for the government to cut their losses and take it rather than expend any more resources trying to collect some unknown amount at some unknown time in the future.

According to a recent audit report by the Treasury Inspector General for Tax Administration (TIGTA), there are huge OIC backlogs at both the Memphis and the Brookhaven Offer Units, but Memphis is in worse shape than Brookhaven.  The IRS is in the process of transferring cases between sites to even things out, but precious time is lost in the transfer process, so who knows if that will truly reduce delays.

Offers with the following characteristics can expect the longest delays:

  • taxpayer is self-employed
  • taxpayer earns over $100,000 per year
  • taxpayer owes over $50,000 in back taxes
  • taxpayer lives in a state handled by the Memphis OIC Unit (AK, AL, AZ, CA, CO, HI, ID, KY, LA, MS, MT, NV, NM, OR, TN, TX, UT, WA, WI, WY)