2022 Tax Filing Season: Nine Things You Need to Know – JD Supra

The 2022 tax season is upon us. With what promises to be an unusual tax filing season, below are nine updates and tips to keep in mind.

1. Tax Returns are Lagging. On January 12, the National Taxpayer Advocate issued its 2021 report to Congress. The report highlights how the IRS is substantially behind in processing returns, the breakdown of the IRS call center, delays in processing responses to IRS notices sent to taxpayers, and a myriad of other issues. The money quote? The IRS is in crisis. Read the full report here.

2. The IRS is Ramping Up Enforcement Efforts. New enforcement agents (read: auditors) that were brought on as part of the IRSs 2021 hiring spree will finish their training this month and be released to the field. It wont stop there, because on Monday, January 24, the IRS posted job openings to hire 200 more tax attorneys in 2022. A 2022 goal of reporting and recordkeeping compliance is a must for small, medium, and growing businesses.

3. Taxpayers Should File Early and Electronically. In IR-2022-08, the IRS encouraged early return filing as soon as possible and to file electronically to help minimize the effects of potential tax season problems. Doing this has set the table to place responsibility for filing acknowledgment and refund delays on the shoulders of taxpayers by giving fair warning of significant potential difficulties. In other words, if taxpayers run into a filing problem this year, the IRS can claim that We told you to file earlier!

Further, the IRS protected its flank by releasing IR-2022-18 on the first day of filing season (Monday, January 24) urg[ing] extra caution for taxpayers to file accurate tax returns electronically to speed refunds, avoid delays.

Theres an adage that you can only have two out of the fast, cheap, and accurate categories. The IRS wants fast and accurate, pushing cost onto the taxpayer. It may be a little more expensive, but using a professional is worth saving the hassle.

4. Slightly Longer Filing Deadline. The non-extended filing deadline for individuals this year is April 18. This is because the regular deadline of April 15 falls on Washington, DCs Emancipation Day, a recognized holiday for the District. Taxpayers in Maine and Massachusetts get one more day, however. They celebrate Patriots Day on April 18, so they have a one-day reprieve and must file by April 19.

5. Child Tax Credit. Individuals who have received letters from the IRS regarding the Child Tax Credit have been reporting that they are inaccurate. This is the tip of the iceberg, as the information in the form is what the IRS has in its system, even if its inaccurate. Taxpayers who report different but accurate information on their returns will receive further correspondence from the IRS to sort out the discrepancies.

6. Relief has been Requested of the IRS. A coalition that included the American Institute of CPAs (AICPA) sent a formal letter to the IRS requesting relief for taxpayers for the 2022 filing season. It requests that the IRS:

The full letter is here. The IRS has not yet responded.

7. Photo ID is Available for Taxpayer Security. The IRS is implementing ID.me, which utilizes facial recognition software for a taxpayer to log in to their account. In order to log in to their IRS account, the taxpayer will have to take a selfie and upload a photo of their drivers license or passport to verify their identity.

Give in to the machines if you like, but luddites will continue to exist for a long time, and the IRS will have to be able to service everyone. So, if youre skeptical about uploading a picture, use the call center, but be prepared for its long wait times. Even better, delegate the hassle to a professional.

8. Enforcement Resources Focus on Small Businesses and Self-Employeds. As a reminder, OPI (Office of Promoter Investigations think return preparers) was formed in 2021 and OFE (Office of Fraud Enforcement) was moved from LB&I (Large Business and International), both now housed in the SB/SE (Small Business/Self-Employed) Division. This provides insight on where enforcement efforts are focused.

9. Grievances Were Communicated to the IRS. Finally, the National Taxpayer Advocate Erin Collins hosted a conference on January 20. Ms. Collins reviewed the report to Congress mentioned above, highlighting the most serious problems and data behind the expected 2022 filing problems. The most serious problems currently are:

To illustrate just how behind the IRS is, the Taxpayer Advocate recently published the below figures, outlining the work the organization had ahead of it as of late last year.

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2022 Tax Filing Season: Nine Things You Need to Know - JD Supra