It’s going to be a frustrating and complicated 2021 tax season according to the IRS. From the pandemic response benefits, to additional child tax credits, the tax “norm” has changed drastically.
Professionals inside and out of North America are watching as the Internal Revenue Service drops the metaphorical ball on processing returns. The millions of returns sitting on IRS agents’ desks are not only affecting United States citizens and our non-resident aliens and U.S. citizens living abroad. Accountants and tax preparers are anxiously awaiting the January 24th IRS tax season opening to see how the season is going to go.
What is Happening?!
There are a few issues going on with the Internal Revenue Service this year. One of them is the millions of unprocessed returns that are currently sitting and waiting to be addressed. The 2021 tax year is starting out rocky as the backlog of returns are eating up agent’s available time. All new and paper returns are being delayed due to the never ending queue of returns waiting to be processed. This is causing frustration among a lot of tax payers and tax professionals. On top of this, all Canadians who have to file U.S. taxes are at a double disadvantage. Canadians have to file their U.S. returns on paper. Processing paper returns becomes more difficult and drawn out, as the agent has to enter all the information by hand.
Along with the excessive amount of returns sitting on the desks of over worked IRS agents, the Great Resignation has left it’s mark on the entire industry. This year, the IRS is seeing an all time low employment rate as agents are retiring or leaving the profession. Additionally, the IRS experienced a seven year hiring freeze from 2011 to 2018. Commissioner Charles Rettig said we “lost an entire generation” of employees during that period. “Experienced and knowledgeable” employees are leaving at higher rates than ever. With the 8 to 9 month training period required for IRS employees, hiring new agents is next to impossible.
The main takeaway is that there are going to be major delays in the processing of your returns and refunds. No matter how prepared you might be, this is going to be a frustrating and complicated 2021 tax season. Don’t forget to be kind to your tax professional. We also want your return processed as quickly as you do.