The 10 Worst IRS Problems Taxpayers Face

Related: IRS’ Top 10 Criminal Cases of 2021

National Taxpayer Advocate Erin Collins told lawmakers Wednesday that 2021 was “the most challenging year taxpayers and tax professionals have ever experienced” and that she was “deeply concerned” about the upcoming filing season.

In her annual report to Congress, Collins said 2021 “provided no shortage of taxpayer problems,” and more await the 2022 filing season.

“While my report focuses primarily on the problems of 2021, I am deeply concerned about the upcoming filing season,” Collins added in releasing the report. “Paper is the IRS’s Kryptonite, and the agency is still buried in it.”

As of late December, Collins reported, the IRS “had backlogs of 6 million unprocessed original individual returns (Forms 1040), 2.3 million unprocessed amended individual returns (Forms 1040-X), more than 2 million unprocessed employer’s quarterly tax returns (Forms 941 and 941-X), and about 5 million pieces of taxpayer correspondence — with some of these submissions dating back at least to April and many taxpayers still waiting for their refunds nine months later.”

According to the 2021 annual report, “[t]he imbalance between the IRS’s workload and its resources has never been greater.”

When taxpayers file their 2021 tax returns, millions who received Advance Child Tax Credit (AdvCTC) payments will have to reconcile the monthly advance payments they received with the amounts for which they are eligible, Collins explained.

“Similarly, eligible taxpayers who did not receive some or all of the third round of stimulus payments, as authorized by the American Rescue Plan Act, will have to claim them as credits on their returns. Thus, the unprecedented processing and refund delays taxpayers experienced in 2021 could be as bad, and potentially worse, in 2022 if taxpayers do not file electronically or do not properly reconcile their monthly AdvCTC payments or the third stimulus payment with their 2021 return.”

Read the gallery above for the top 10 worst problems encountered by taxpayers in 2021, as explained by Collins’ annual report.