WASHINGTON – U.S. Sens. Mark R. Warner and Tim Kaine joined U.S. Sens. Bob Menendez (D-NJ), Bill Cassidy (R-LA), and 212 colleagues in a bipartisan, bicameral letter calling on the Treasury Department and the Internal Revenue Service (IRS) to provide penalty relief for taxpayers and help reduce processing backlogs at the IRS, after hearing from Virginians who are still waiting on their refunds from the 2021 filing season. Taxpayers may qualify for relief from penalties if they made an effort to comply with legal requirements but weren’t able to meet their tax obligations due to circumstances beyond their control, including processing backlogs. The lawmakers noted the delayed processing of amended returns has been particularly devastating to small businesses whose applications for emergency loans from the Small Business Administration (SBA) have been caught in limbo nearly two years after the pandemic began.

“While the COVID-19 pandemic has strained every federal agency, the impact on the IRS has been particularly severe,” wrote the lawmakers. “As of December 23, 2021, the IRS continued to have a backlog of 6 million Forms 1040 (Individual Income Tax Returns) and 2.3 million amended individual tax returns. In addition, the IRS has 2 million Forms 941 (Employer Quarterly Tax Returns) that must be processed before the nearly 500,000 amended Forms 941 can be processed.”

“Recognizing the extraordinary challenges of the COVID-19 pandemic, in addition to the IRS operating with antiquated technology and a constrained budget, we find the current situation alarming. We stand ready to support the IRS and look forward to hearing how we can help you address any obstacles facing the agency,” the lawmakers added. “However, we respectfully request the IRS consider the following measures to bring immediate relief to taxpayers, and reduce the backlog, during this tax filing season. ...While we recognize no single action will alleviate issues that have resulted from difficulties at the IRS spanning administrations of both political parties, these steps would provide our constituents with greater certainty as we enter this year’s filing season.”

Last week, Senator Warner raised concerns with the IRS after hearing from Virginians who are still waiting on their refunds from the 2020 filing season, following a February 2021 letter addressing the same issue of persistent processing delays at the IRS. As members of the Senate Budget Committee, Senators Warner and Kaine are currently pushing for legislation to substantially increase funding for the IRS and help the agency improve operations in the long term.

In addition to Sens. Warner, Kaine, Menendez, and Cassidy, the letter was signed by Sens. Cory Booker (D-NJ), Michael Bennet (D-CO), Richard Blumenthal (D-CT), Sherrod Brown (D-OH), Ben Cardin (D-MD), Tom Carper (D-DE), Chris Coons (D-DE), Catherine Cortez Masto (D-NV), Tammy Duckworth (D-IL), Kirsten Gillibrand (D-NY), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Cynthia Lummis (R-WY), Joe Manchin (D-WV), Jeff Merkley (D-OR), Chris Murphy (D-CT), Jacky Rosen (D-NV), Debbie Stabenow (D-MI), Chris Van Hollen (D-MD), Raphael Warnock (D-GA), and Ron Wyden (D-OR).

This effort is supported by the Tax Professionals United for Taxpayer Relief Coalition, which includes the American Institute of CPAs (AICPA), National Association of Enrolled Agents (NAEA), Padgett Business Services, H&R Block, Latino Tax Professional Association, National Association of Tax Professionals (NATP), National Society of Tax Professionals (NSTP), National Society of Accountants (NSA), National Society of Black Certified Public Accountants (NSBCPA), National Conference of CPA Practitioners (NCCPAP), Diverse Organization of Firms Advocacy Committee, National Association of Black Accountants (NABA), and Prosperity Now.

Full text of the letter can be found here and below. 

Dear Secretary Yellen and Commissioner Rettig,

As the 2022 tax filing season fast approaches, we are concerned about the unprecedented challenges facing the Internal Revenue Service (IRS) and the ongoing impact on our constituents. While the COVID-19 pandemic has strained every federal agency, the impact on the IRS has been particularly severe. As of December 23, 2021, the IRS continued to have a backlog of 6 million Forms 1040 (Individual Income Tax Returns) and 2.3 million amended individual tax returns.  In addition, the IRS has 2 million Forms 941 (Employer Quarterly Tax Returns) that must be processed before the nearly 500,000 amended Forms 941 can be processed.

In many cases, the delayed processing of amended returns has been devastating to small businesses in our communities whose applications for emergency loans from the Small Business Administration have been caught in limbo nearly two years after the COVID-19 pandemic began. The situation has deteriorated to a point that the Taxpayer Advocate Service (TAS) will no longer accept cases solely involving the processing of amended returns^] This has made it impossible for frustrated taxpayers to find any help.  When our constituents cannot get assistance from the IRS and TAS, they contact us, and we have our hands tied at this point as well. 

Recognizing the extraordinary challenges of the COVID-19 pandemic, in addition to the IRS operating with antiquated technology and a constrained budget, we find the current situation alarming. We stand ready to support the IRS and look forward to hearing how we can help you address any obstacles facing the agency. However, we respectfully request the IRS consider the following measures to bring immediate relief to taxpayers, and reduce the backlog, during this tax filing season:

• Halt automated collections from now until at least 90 days after April 18, 2022;
• Delay the collection process for filers until any active and pending penalty abatement requests have been processed;
• Streamline the reasonable cause penalty abatement process for taxpayers impacted by the COVID-19 pandemic without the need for written correspondence; 
• Provide targeted tax penalty relief for taxpayers who paid at least 70 percent of the tax due for the 2020 and 2021 tax year; and
• Expedite processing of amended returns and provide TAS and congressional caseworkers with timely responses.

While we recognize no single action will alleviate issues that have resulted from difficulties at the IRS spanning administrations of both political parties, these steps would provide our constituents with greater certainty as we enter this year’s filing season. Thank you for your attention to this urgent matter and the dedication of the IRS and Treasury personnel to improving the filing process in these extraordinary times.

Sincerely,

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