Eight members of New Jersey’s U.S. congressional delegation are urging the Internal Revenue Service to provide penalty relief for millions of taxpayers amid ongoing IRS backlogs in processing tax returns for both individuals and small businesses.
Sen. Bob Menendez and Rep. Bill Pascrell, representing North Jersey’s 9th Congressional district, are among those who led in sending bipartisan, bicameral letters to federal Treasury Secretary Janet Yellen and IRS Commissioner Chuck Rettig.
“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 U.S. Senate and House lawmakers wrote in their Jan. 26 letters.
As of late December 2021, the IRS continued to have a backlog of more than 6 million individual income tax returns and 2.3 million amended individual tax returns, lawmakers said.
“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,” the letters said.
Menendez sits on the Senate Finance Committee and Pascrell is a member of the House Ways and Means Committee—the two congressional panels that oversee the IRS and federal tax policy.
Among the other New Jersey lawmakers signing the letters were Sen. Cory Booker and North Jersey Reps. Mikie Sherrill and Josh Gottheimer (D-5). The letters were signed by at least 216 U.S. Senate and House lawmakers from both sides of the aisle.
The U.S. Senators and House members urged IRS to:
- Stop 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 the Taxpayer Advocate Service 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,” the letters said.
Rep. Gottheimer noted how important it is for IRS to reduce the backlog as the agency kicks of the new filing season. The 5th Congressional district lawmaker said in Jan. 27 Facebook post that IRS must take steps “to send tax refunds ASAP – so people across the country can get the financial relief they need.”
IRS Seeks to Provide Relief
IRS said in a Jan. 27 statement that the agency has been working on “important relief” for taxpayers “during this unprecedented pandemic.”
The tax agency noted despite entering the COVID pandemic underfunded and with “outdated” technology, it “has aggressively pursued every available option to better serve taxpayers this filing season.” The agency said it has sought to provide relief to taxpayers by “suspending issuance of certain automated notices and related actions.”
Additionally, it “already decided to suspend notices in situations where we have credited taxpayers for payments but have no record of the tax return being filed. In many situations, the tax return may be part of our current paper tax inventory and simply hasn’t been processed.”
IRS Commissioner Chuck Rettig said in the agency’s statement that IRS “employees have worked hard, long hours during the pandemic to assist taxpayers and successfully modify our systems, despite lacking the funding that we need to adequately serve the American people.”
“We are continuing to balance multiple unprecedented demands, including starting the filing season as well as continuing to work on important new tax provisions,” Rettig added.