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Taxpayer Advocate: 4.7M Paper Returns on Hold

There is a backlog of 4.7 million paper income tax  returns, according to this year’s report from the National Taxpayer Advocate. In addition about ten million pieces of mailed tax returns and correspondence is sitting in Internal Revenue Service trailers.

Those are some of the impacts of the shutdown of IRS service in the effort to halt the spread of the Covid-19 virus.  The IRS halted paper processing on May 16 and other service cuts means it  has sent “only a very limited volume of outgoing taxpayer correspondence.”

That includes more than million notices that could not be mailed due to closure of notice production centers between April 8 and May 31. The IRS has started mailing notices, but many of these will have printed deadlines that have been extended and the agency will insert information explaining the issue.

Those were among  highlights of the report from National Taxpayer Advocate Erin Collins in delivering her first annual report to Congress. Reduced assistance included a substantial decrease in Volunteer Income Tax Assistance, Tax Counseling for Elderly, and Low Income Taxpayer Clinic services. And with the National Distribution Center shut down, taxpayers cannot acquire pre-printed forms.

Those who submitted paper returns, those entitled to refunds may have a long wait because. the IRS does not know when it can process all returns in its mail facilities. Those with returns mistakenly flagged by processing filters are already experiencing lengthy delays in receiving refunds.

The Advocate’s report noted her unit has found filters, designed to detect identity theft and other types of refund fraud, have a false positive rate of 50 percent. Refund delays are significantly affecting low-income taxpayers who claim earned income tax credit or additional child tax credit.

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