The IRS overcame a backlog of 23 million pieces of mail as it returned to socially distanced operations this summer, a senior agency executive said.
“We’re pretty much back in business,” Sunita Lough, IRS deputy commissioner for services and enforcement, told a CCH Inc. virtual conference sponsored by Wolters Kluwer October 27.
There are still 5 million pieces of mail to open and sort for checks to cash, refund claims to expedite, and individual and business tax returns to process, Lough said. Some campuses are returning to a semblance of normal operations more quickly than others, she added.
The difference between the 23 million backlog estimate and the oft-quoted 11 million tabulation is accounted for by additional returns, correspondence, and other mail already in process at the agency, an IRS official later explained.
“We had so much backlog that . . . after a while the post office wasn’t even delivering the mail,” which was also loaded onto tractor-trailers, Lough said.
Lough provided an update on IRS operations, from clearing various backlogs to advance refund credit anti-fraud efforts to new online taxpayer and practitioner document exchanges and the agency’s coronavirus pandemic operational adjustments.
Scam Alert
Lough said the IRS is aware that taxpayers and practitioners are frustrated by the pace at which it is processing net operating loss carryback refund requests.
“Those are very voluminous documents,” Lough said. Nevertheless, NOL carryback refund processing “has not moved as fast as we hoped it would have,” she said.
Lough noted that advance refundable employee retention tax credits, as well as family and sick leave applications, may have brought out scammers.
The IRS is employing fraud filters for requests for economic impact payments and forms 941 and 7200, Lough said.
The IRS Criminal Investigation division and the Treasury Inspector General for Tax Administration are on alert for advance refund fraud claims, she added.
“You have a lot of people who will . . . try to get the money where they don’t deserve it,” Lough said.
Pandemic Adaptations
The coronavirus pandemic has forced the IRS to make many adaptations, especially in the e-services arena, that it wouldn’t have contemplated just last year, Lough said.
“Because of the scams, we always said, ‘The IRS will not call you,’” Lough noted. Now the pandemic-era IRS sends letters to taxpayers under examination telling them to expect a follow-up email or phone call, and the agency sends zip files over secure email to practitioners and taxpayers, she said.
Audits and collections have been hampered by the limits on travel and in-person interactions, Lough said.
“You really do need to be able to see the taxpayer,” Lough said. “There’s nothing like body language. . . . To be able to resolve an audit, to be able to see each other, sit across the table, really makes a big difference.”
Videoconferencing has helped, although Lough noted that government computer firewalls prevent IRS employees from using commercial software such as Zoom, opting instead for specialized, secure products.
The IRS is also exploring computer screen-sharing technology to enable secure document transmissions from the taxpayer, Lough said.