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The Internal Revenue Service is under enormous pressure to quickly disperse the $ 1,200 pledged to most people in the $ 2.2 trillion relief bill for coronaviruses. Experts say it could take months for everyone to get checks – some people may wait until they file their taxes next year.
Over the past 10 years, the IRS’s budget has been cut by about 20 percent, leaving the agency with aging technology and forcing it to cut staff and training, experts say. The added stress of the coronavirus is already causing headaches for customer service.
“There is a shortage of qualified people to do the job and they are overworked,” said Mark Everson, who was IRS commissioner from 2003 to 2007 under President George W. Bush. “If you’re going to receive a check in the mail, it could happen as late as the end of August. “
Treasury Secretary Steven Mnuchin told Democrats in the House Wednesday that the first round of coronavirus payments will be made by direct deposit next week. Democrats in the House Ways and Means Committee estimate that around 60 million people would be eligible for these deposits – a small fraction of the IRS ‘estimated 150 million people will file taxes this year.
The remaining 90 million, as well as millions of others, are expected to wait for mail-in deposits, which takes time. But the headaches don’t stop there.
Some people may have made more than the $ 99,000 income cap last year, which means they would miss payments. But, if they lost a job and their income fell, they would be eligible and would have to return to the IRS in 2021 to receive their payments.
Everson, who is now vice-president of the AlliantGroup corporate tax council, says people confused about payments shouldn’t bother calling the IRS to figure out what to do.
“I would not advise anyone to call,” said Everson. “You’re not going to be on the phone. “
The IRS itself agrees. The part of their site dedicated to payment advice for coronaviruses “Do not call” and “check for updates”.
This addiction to web updates creates a new layer of confusion for many low-income people and the elderly. Nina Olson, who served from 2001 to August last as an IRS internal watchdog known as the National Taxpayer Advocate, said that many people without bank information on file did not have access to the Internet .
Olson says the IRS’s workforce has been severely depleted by budget cuts and further reduced as the agency tries to comply with the CDC’s social distancing mandates to slow the spread of the coronavirus.
“Part of what hit the cutting room floor is quality service to taxpayers,” said Olson. “It is really a problem when you are giving money to people in crisis where people are already anxious and it can be a matter of life and death for an individual or a business. “
Mnuchin says the IRS is rushing to set up a web portal to allow people to update their banking and personal information so they can take advantage of direct deposits. But these are not the only questions people are asking.
Olson says that many low-income taxpayers and people without a bank account get their refunds through prepaid debit cards. These debit cards are probably no longer active, but account data can still be registered with the IRS. If relief payments go to these cards, these taxpayers will have to go through a process of working with the IRS.
The agency says it plans to send people a letter informing them 15 days after processing or sending a payment. The goal is to confirm that people have received payments and, if they have not, to give them a chance to reconcile.
Olson and Everson said these specific coronavirus problems would have been difficult for the agency to predict, but the agency could have done a lot to prepare for an economic disaster like the one the country faces today if it had had the funding to do it. .
“There have been a series of budget cuts and this has exhausted the workforce, particularly in the technology area,” said Everson. “The technology in which you have to continually invest has changed very little. “
Everson said he was concerned that system pressure and haste to issue payments would also put the agency at risk of a data breach.
Current Interim Taxpayer Advocate Bridget Roberts released a report in January on how the 20% cut in funding over the past decade has resulted in a 20% cut in staff, even though the number of returns filed increased by 9%.
The IRS has seen its funding increase slightly in recent years, first in 2018 after congressional approval of the law on tax cuts and jobs. But the increases did not offset the cuts that began in 2013 when the agency was involved in a scandal.
Republicans in Congress have accused the agency of using ideological targeting to deny nonprofit status to organizations that the IRS has deemed politically conservative. Representative Jim Jordan, R-Ohio, who helped lead the agency’s cut to funding, said it was a necessary response to the scandal.
“When you have a federal agency with the power, leverage and ability to make an impact on the lives of American citizens like the IRS, and you find out that they were targeting people based on their political beliefs, c ‘is scary,’ said Jordan in a statement. interview. “And then come and ask the taxpayers for more money, I mean really, it’s not going to fly. “
Jordan and former Congressman and current White House chief of staff Mark Meadows led the Conservative House Freedom Caucus during the scandal. They both criticized the agency for its bureaucratic failures and mismanagement.
The Democrats rejected the scandal at the time and restored more funding when they took control of Congress after the 2018 election. Representative Lloyd Doggett, D-Texas, who chairs the subcommittee on tax matters said they were catching up.
“The Republicans have assured that the IRS is less able to do its job,” said Doggett. “I think it would be great if we could have a bipartisan initiative following this crisis to examine the IRS and try to rationalize it, rationalize it for this century. “
Jordan would not rule out the possibility of considering future increases in IRS funding if the agency could demonstrate that it did not have enough resources to fully enforce coronavirus legislation. But he remains reluctant to agree to divert any expenditure from direct aid to finance a federal agency.
Doggett, Everson and Olson also expressed concern that the IRS workforce was further depleted by the coronavirus epidemic. An agency spokesperson said that 45,000 of the estimated 80,000 IRS employees work remotely and that thousands more comply with CDC regulations as they continue to work in offices across the country.
More than 20,000 employees are on temporary leave, but an IRS spokesperson said the virus would not affect their ability to make payments.
Given all of the challenges, Everson and Olson say it may take up to next year to fully resolve the payments. For now, they have a few tips: follow the IRS instructions and avoid calling, remember to file your taxes and avoid scams that ask for personal information over the phone. The IRS will never call you or ask for your information, said Everson.
“Anyone who isn’t comfortable connecting online must find a friend or relative who can help them by interacting with the service,” said Everson. “If you hear about the IRS and it’s really the IRS, don’t ignore them if they send you a letter. “