IRS

2 Ways the EITC Error Rate Is High

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Line graph
Source: National Taxpayer Advocate Annual Report to Congress 2018 [click for larger image]

And 6 contributing factors.

By CPA Trendlines Research

The Earned Income Tax Credit is considered one of the most efficient federal programs for sustaining people with inadequate income. Part of the EITC’s efficiency results from the lack of an intermediary checking the qualifications of those who receive it.

MORE: Who’d Like a Friend in the IRS? | Hello, IRS? Anybody Home? | Tax Season 2019 Serves Up a Taste of the Future | The Demise of Schedule A? | Tax Refund Fury Roils Busy Season
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The tax return itself is the application for EITC. There is no other process, no pre-return vetting, no social workers. The closest thing to an intermediary is the tax preparer who makes sure the correct income is reported and the correct forms filled out.
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Refund Amounts Remain Lower than 2018

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data chart
Cumulative through week ended March 29

Tax pros handling 54.3% of e-filings, down 2 points from year ago.

By Beth Bellor
CPA Trendlines Research

The pace of 2019 remains behind that of 2018 on most counts as the tax season stumbles to a close.

MORE: Who’d Like a Friend in the IRS? | Hello, IRS? Anybody Home? | Tax Pro E-Filing Off 2.7% from Last Year’s Pace | Tax Professionals File 38 Million Returns | Refunds Still Up, but Only by 0.7%
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The IRS had received 92.9 million individual income tax returns as of the week ending March 29, the last data available, down 1.4 percent from the same period last year. It had processed 90.3 million returns, down 2 percent.
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Is the IRS about to Get Beefed Up?

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TODAY’S BONUS QUESTION: Lessons from Tax Season to apply to 2020?

Trump proposes 5% boost to the IRS budget, reversing years of cutbacks and declines.

BUSY SEASON BAROMETER
TODAY’S BONUS QUESTION: What are firms learning from Tax Season 2019, that they’ll apply in 2020?
Join the Survey. Get the Results.

By CPA Trendlines Research

After many years of increasing austerity—and some would say crippling austerity—the IRS may have bottomed out. Despite broad cuts proposed in the overall 2020 federal budget, President Trump has included an additional $362 million—a five percent increase—for the agency that gathers the funds that keep the United States in business.

MORE BUSY SEASON: Tax Season Funnies: April Fool Is When?  |  Wanna Change the Tax World?   |  How the IRS Hides Its Legal Decisions  |  Tax Season 2019 Serves Up a Taste of the Future  |  The Biggest Reason Fraudsters Run Rings around the IRS  |  The IRS Free-File Flop  |  Protect Your Clients’ Assets  |  The Demise of Schedule A?  |  Tammy’s Tale of Tax Season Tardiness  |  How Effective Project Management Makes Your Life Easier  |  Survey: Busy Season Goes Sour   |  When Clients Cash Out: Four Smart Financial Moves

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If Congress approves the budget as proposed (and that’s bound to be an exciting story), the IRS can begin—just begin—to recover some of what has lost over the last decade or so.

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The Biggest Reason Fraudsters Run Rings around the IRS

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IRS chases the wrong returns, delaying refunds, wasting resources.

By CPA Trendlines

Let’s have a pity party! You’re invited.

Let’s pity the Internal Revenue Service for having to identify fraudulent tax returns and taxpayer identities.

MORE: The Big Free-File Flop | The Demise of Schedule A? | Refunds Still Up, but Only by 0.7% | Survey: Busy Season Goes Sour | Tax Refunds Up 1.7% | Lessons Learned: How the Federal Shutdown Hit Busy Season 2019 | Tax Refund Fury Roils Busy Season | Taxpayer Advocate Slams Congress over Funding

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Let’s pity the taxpayer whose tax return gets flagged as fraudulent—or her stolen identity that doesn’t.

And let’s pity the tax preparer stuck between the legitimate taxpayer and the fumbling, under-funded, well-intentioned bureaucracy of the IRS. READ MORE →

1.6 Million Tax Clients Gone Missing?

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Chart of tax filing data for the week ending Feb. 8, 2019
^ Tax filing data for the week ending Feb. 8, 2019

Opening days show accountants filed only 40% of IRS intake. Blame the shutdown.

By Beth Bellor
CPA Trendlines

The IRS might have rushed into action as soon as the government shutdown ended, but it still is feeling the effects as all filing statistics remain on the downside two weeks in.

MORE: BUSY SEASON: Accountants Worry for U.S. Economy | Tax Shops Bulk Up for Big Busy Season | BUSY SEASON: The Busiest Ever? | Survey: Tax Season Launches with a Whimper | 16 Big Questions for Tax Season | SURVEY: Tax Accountants Alarmed by TCJA & Shutdown

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As of the week ending Feb. 8 – the latest data available – the Internal Revenue Service had received 28.8 million returns, down 6.9 percent from the same week in 2018. It had processed 27 million returns, down 10.2 percent, for a processing rate of 93.8 percent.

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DIYers Outpace Pros in E-Filing Growth Rate

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Chart of IRS filing data for week ending April 6, 2018Refunds remained down in number and total amount.

By Beth Bellor
CPA Trendlines

With 11 days left in the busy season, the pros were struggling to keep their share of e-filings.

MORE ON TAX SEASON: Pros Filing 55% of E-Returns | Percentages Don’t Tell Whole IRS Filing Story | Tax Pros Keep Edge in E-Filings | David Bergstein on Tax Season | 10-Step Sec. 199A Deduction Checklist for Tax Practitioners | Tax Accountants Fill the Breach of a Failing IRS
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As of April 6, the latest data available, the IRS had received 103.8 million individual income tax returns, up 0.1 percent from the same period the previous year. It had processed 101.1 million of them, also up 0.1 percent.
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Percentages Don’t Tell Whole IRS Filing Story

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Chart of IRS filing data for the week ending March 23, 2018Tax pros slightly behind last year’s pace, but still hold the edge in sheer numbers.

By Beth Bellor
CPA Trendlines

By many measures, this tax season is slightly ahead of 2017’s pace.

MORE ON TAX SEASON: Professionals Losing the Battle on E-Filings to DIYers | SURVEY: New Tax Law Roils Busy Season | David Bergstein on Tax Season | Tax Accountants Fill the Breach of a Failing IRS | New Tax Law Roils Busy Season 2018 | Beware the EZ Way Out  | When Clients Face ‘Unreal’ IRS Audits
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The IRS had received 85.7 million individual income tax returns by the week ending March 23, the latest data available. That’s up 0.5 percent from the same period last year.
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