If you’ve ever had trouble staying on top of your paperwork, you’re probably still doing great compared to the IRS.
Along with a serious backlog of unprocessed returns and yet more stimulus checks to send out, the tax agency is now under the microscope for their falling audit rates as it struggles to keep up with its increased workload.
As Biden considers big tax hikes, a new report is putting a spotlight on how the IRS is dealing with tax evasion, especially when it comes to the top percentage of wealthy Americans.
That means even if you plan to file your taxes well before the new May 17 deadline this year, there’s no guarantee you’ll get your refund promptly.
We’ve got the facts on what’s going at the IRS and what you can do while you wait for your refund.
What can I do to get my money?
When the tax agency’s sorting facilities closed last spring due to the pandemic, millions of unopened paperwork went into storage. The IRS still has about 6.7 million returns waiting to be processed with taxpayers facing mounting delays in getting their refunds.
And the IRS is also having to deal with more complicated returns due to all of the tax code changes that have stemmed from COVID relief measures, as well as sending out stimulus checks and other benefits, resulting in even further delays.
The tax returns that face the longest delays are the manual paper returns. If you want to give your return a head start and help eliminate the stress of filing, pick a reliable tax filing software program and get it in as soon as possible.
Otherwise, unfortunately, the only things you can do to get your refund sooner is to make sure your return is complete and contains no errors before you hit “submit”.
And you can start checking the IRS’s Where’s My Refund? tool 24 hours after uploading your forms (or 4 weeks after you mail your return) to get the current status of your refund.
Finally, if you’re going to end up potentially waiting longer for your refund this year, you may as well doing everything you can to ensure it’s the biggest refund you can get.
IRS audit rates and evasion woes
It appears that even though Biden plans to raise taxes for America’s highest earners to pay for infrastructure, the IRS doesn’t have the teeth to enforce tax evaders — and it’s costing the federal government about $175 billion a year in revenue, according to new research.
What’s worse, the researchers suggest, is that the problem may be larger than the tax agency even realizes. The study found that taxpayers making more than $200,000 are hiding more than 20% of their income from tax collectors.
After years of funding cuts (IRS Commissioner Charles Rettig recently testified to Congress that funding for the agency has fallen 20% since 2010), and new evasion tactics available to the rich, the issue is coming to a head.
Back in 2010, the IRS audited 1.7 million tax returns. While last year it only audited 770,000 returns for the 2019 fiscal year.
And last year, audits recaptured $1.2 billion from millionaires. While that may sound like a lot, it’s a significant decrease from its $4.8 billion tally in 2012, according to a TRAC Research Center report.
The report added the scathing assessment that the agency is, “is letting billions of dollars in tax revenue slip through its fingers because budget and staffing cuts have left [it] incapable of fairly and effectively auditing the 637,212 millionaires now living in the United States.”
What’s going on with the tax return backlog?
Adding to the agency’s woes, a report released earlier this month from the Government Accountability Office, indicates the IRS is wholly unprepared to handle an influx of refunds this spring.
According to the report, the pandemic has only served to highlight how outdated the IRS’s paper-reliant system is. On top of that, the accountability office notes that 40% of businesses can’t file their taxes electronically so need to rely on the manual filing process.
Meanwhile, the agency isn’t set up to deal with complications through a virtual process and the current system requires taxpayers to appear in person at an IRS office for certain issues.
The agency did warn taxpayers when the season officially opened that they should expect limited face-to-face operations, heavy call volumes for its support lines and delayed refunds for paper returns — but it’s given no indication of timelines on delays.
What if I need money right away?
In the face of delays, if you need some extra funds ASAP, you have a few options to make room in your budget right now.
Cut the cost of your debt. Paying with your credit card is convenient — until you’re left with all this expensive interest. Make your debt easier to carry — and unload sooner — by folding your balances into a single debt consolidation loan at a lower interest rate.
Slash your insurance bills. Car insurance companies have been handing out discounts to drivers sticking close to home through the pandemic. Not yours? Sounds like it’s time to shop around for a better deal. And while you’re looking, you could also save hundreds on homeowners insurance by comparing rates to find a lower price.
Trim your budget to free up more cash. By finding a few creative ways to cut back, you can possibly rearrange your budget to give yourself your own “tax refund”. Save on your energy bills by waiting to run your dishwasher and washing machine during off-peak hours. Have a hobby or special talent? Turn it into a side hustle to bring in extra income. And, download a [free browser extension](5:32 https://moneywise.com/a/capital-one-shopping-vs-honey-which-one-saves-you-more) that will automatically scour the web for better prices and coupons whenever you shop online.
This article is auto-generated by Algorithm Source: finance.yahoo.com