THE PANDEMIC’S IMPACT
ON THE IRS

By: Holland King, MTAX, J.D.

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.

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.