The Pandemic’s Impact on The IRS

Holland King | MTAX, J.D.

June 1, 2020. 4 min read

We are currently in unprecedented times, with regular routines and business and social norms being disrupted in attempts to minimize the impact of COVID-19. The disruption is not only limited to individuals or even businesses but also is affecting governmental agencies, as seen most clearly by the impact on the IRS. On March 27th, an “Evacuation Notice” was issued requiring almost all IRS employees to work remotely, with only those employees fulfilling non-remote mission-critical duties allowed to come into an office. With the current state of the IRS’s technology and funding, this order was, at best, optimistic. By early April, many states had issued shelter-in-place orders that further limited the ability of IRS employees to perform their responsibilities.

Since the release of the order, the IRS has shut down many methods of communication. As one example, the CAF office, the central processing location for power of attorney authorizations, has taken its fax line down, requiring all new forms to be physically mailed. However, all service centers are currently closed and not accepting mail. While the USPS is holding mail sent to the IRS, the volume is so high that incoming mail is now being stored in trailers. Additionally, all taxpayer assistance centers have been closed, limiting the ability of individuals to receive assistance with questions and filing of returns.

While the IRS has been forced to shut down many public-facing functions, those that are still open are now being overwhelmed with questions regarding the recently passed CARES Act and related stimulus payments.

There are many unanswered questions around the implementation of payments, and both individuals and tax preparers are looking to the IRS for answers. We are also still in the midst of filing season.

The result of all of this is yet to be determined.
  • It is safe to say that the IRS is not just losing the time from the actual shut down, which has yet to be lifted, but will also need a substantial amount of recovery time to dig out of the backlog created by this situation
  • This will undoubtedly affect many taxpayers at both the individual and corporate level.
  • Communications being sent in now will not be processed, much less reviewed, for weeks or even months to come and answers will be even further out.
  • Amended returns will take additional time for processing and approval.
  • Ongoing audits will drag on, and a wave of extension requests is likely on the horizon.
Setting proper expectations.

While the delays, lack of communication, and inaccessibility are frustrating at best, it is essential to remember that this is not the IRS’s fault. We are all adjusting to become efficient and effective with our new working situations. Unfortunately, the effects of this will continue to be felt for months and possibly years to come. The IRS is trying to deal with this situation while keeping their employees safe. We will need to have additional patience when dealing with the IRS in the months to come.

New Small Firm Cost Seg Opportunities

Cost segregation is a highly beneficial and widely accepted tax compliance strategy utilized by commercial real estate owners and tenants to accelerate depreciation deductions, defer tax and improve cash flow.

By Brian Coddington | 12 April

Can the R&D Tax Credit Be Used to Offset the AMT?

The Protecting Americans from Tax Hikes (PATH) Act of 2015 includes provisions that allow certain taxpayers to offset their AMT liability with the R&D tax credit for taxable years beginning on or after Jan. 1, 2016.

By Alex Pak | 7 April

How the R&D Tax Credit Has Expanded Over the Years

Governments typically incentivize private industry to produce research and development (R&D) as a strategic tool to advance their economies.

By Deb Roth | 8 April

The Nine-Point Plan for Handling §179D

Section §179D can help your commercial real estate clients reduce taxable income and increase cash flow significantly.

By Source Advisors | 24 March

Reconciliation bill likely to have a tax impact on energy-efficient buildings

It’s no secret that climate change is a top priority for the current administration. As part of the hotly debated tax and spending legislation moving through Congress

By Source Advisors | 28 October

How Integrators Can Take Advantage of Incentives and Tax Savings

Integrators who have experienced a dip in business during the pandemic may be able to take advantage of a few lesser known tax credits and income tax deductions.

By Source Advisors | 11 August

Tax incentives for energy-efficient buildings would grow if BBB passes

As part of the hotly debated tax and spending legislation moving through Congress — referred to as the Build Back Better Act — the House proposed a laundry list of investments and incentives for upgrading homes and buildings. The $1.7 trillion BBBA also includes dozens of proposals promoting electric vehicles, energy storage, renewable power and a more dynamic electric grid.

By Source Advisors | 29 December

Subscribe for our newsletter
to stay up to date
Email address
Loading

Related Articles