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Where's Your Tax Refund?

Still waiting on that Tax Refund? Unfortunately, you are not alone. National Taxpayer Advocate Erin Collins announced that as of the end of May, 21.3 million paper-returns are currently backlogged, which is up 1.3 million from this same time last year.  While this backlog is crushing the IRS, it is more importantly crushing the tax payers who rely on their refund to help get through difficult economic hardship.

The IRS has worked hard to get tax payers who typically paper-file returns to transition to electronic filing. There are still close to 17 million taxpayers who choose to file on paper. Some of them don’t have an option and have a tax form or schedule that the agency couldn’t process electronically. Prior to the Coronavirus Pandemic, paper-filers could expect their refund within four to six weeks. With the rare exception, the current expected refund is 10 months or longer.

In May of the current year, the IRS averaged processing 200,000 Forms 1040 taxes returns every week, but even with this effort, they are at a 8.2 million backlog of returns. This does not include the millions that still had to be classified or were expecting to arrive before the October 15 extended filing deadline. In order to catch up on this backlog, the IRS would have to average 500,000 Forms 1040 returns every week.  If that is not bad enough remember that this does not include business tax returns or amended tax returns that also paper -filed.

While paper- filing is a big hurdle to overcome, the IRS is also having challenges with correspondence processing delays. This is when a taxpayer gets a notice and is request to respond, or chooses to respond and typically happens so by mail. It is taking on average 251 days to complete this process. That is up three times the average processing time in 2019. Identify theft issues are currently waiting nearly a year on average to complete the required review of documentation to substantiate their identities.

The last major issue the IRS is having is the telephone overload. The IRS fielded about 73 million telephone calls during the 2022 filing season. Of those 73 million, on average, only one out of every 10 calls actually reached a human IRS employee. Thehold times have increased to 29 minutes, which is up from 20 minutes in 2021.

The IRS is looking for solutions to these backlog issues. One area of consideration Collins proposed was that the IRS uses 2-D bar coding or some other advanced scanning technology so the transcription of paper returns can be automated for future filing. Currently, IRS agents are manually key stroking these numbers in the system. Other areas of consideration include automating the processing of paper tax returns, reducing barriers to e-filing tax returns, improving the IRS hiring and training processes, and improving telephone services.

Here at Hunter CPA Group, we diligently work on our clients Tax Notices when they are brought to our attention. After completing the proper steps, we are more than happy to assist with contacting the IRS, but it is important to note that we are held to the same contact methods as everyone. We will work our hardest on their behalf when the IRS is able to communicate with us.

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2022 Mid Year Mileage Rate Increase

Did you hear the news? The IRS announced that starting July 1st 2022, the optional standard mileage rate would be increasing for the final six months of the year. Midyear increases in the optional mileage rates are rare; the last time the IRS made such an increase was back in 2011.

What does this mean?

The standard mileage rate for the business use of employees’ vehicles will be 62.5 cents per mile—the highest rate the IRS has ever published—up 4 cents from the 58.5 cents per mile rate effective for the first six months of the year, according to IRS Announcement 2022-13.

Why is this changing?

“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” said IRS Commissioner Chuck Rettig. “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.” 

While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs. 

For a clearer breakdown of the changes, please see the chart below:

PurposeJan. 1 to June 30July 1 to Dec. 31
For Business Use58.5 cents/mile62.5 cents/mile
For Medical Care & Moving Active Duty Armed Forces18 cents/mile22 cents/mile
In Service of Charitable Organizations*14 cents/mile14 cents/mile
*The 14 cents/mile rate for charitable organizations remains unchanged as it is et by statue. Source: IRS (June 2022)

What do I need to do to?

If you use your vehicle for business use, it is very important when it comes to the 2022 tax season that you give your tax preparer the breakdown of your millage to make sure the correct rate is being applied to the time of year it reflects.

If you have any questions, please give Hunter CPA Group a phone call. We are here to help you achieve financial success in every aspect of your financial life.