This is the year to take the leap to e-file, to pay online, or request direct deposit of any refunds.  The IRS has an enormous backlog of mail, an incredible amount of programing work for the upcoming filing season, and the potential for more legislation related economic stimulus on the way.

The National Taxpayer Advocate Erin M. Collins (www.taxpayeradvocate.irs.gov ) is encouraging all taxpayers to file online if at all possible.  In addition to the coronavirus pandemic, the IRS has seen steady budget cuts in the last 10 years.  Their current budget is approximately 20% less than 2010’s budget.  In addition, the IRS workforce has been diminished by approximately the same amount.  Anyone who has tried to reach the IRS can attest to the tremendous wait times and courtesy disconnects. 

The filing season for tax year 2020 is already off to a rocky start.  The opening of filing season has been delayed until February 12, 2021.  This late opening also means taxpayers entitled to two specific credits, the Earned Income Credit and the Additional Child Tax Credit, will not see their refunds until early March, at best.  There is also the backlog of nearly 6.9 million 2019 tax returns still in processing as of December 25, 2020, late-breaking legislation that has required the IRS to program or reprogram their system to accommodate the second round of Economic Impact Payments, as well as other tax-related changes to consider, which will all impact the IRS’ ability to quickly process 2020 tax returns.

A paper filed tax return must be processed and input by hand into the IRS system.  E-filing, on the other hand, skips this step and allows for tax information to be transmitted directly to the IRS, reducing this time-consuming, tedious, and potential error-producing step.  Requesting direct deposit drastically reduces the time to receive any refunds.  The average refund is received via direct deposit within 21 days of e-filing, and often sooner than that.  Conversely, it can take up to eight weeks for a mailed tax return just to be processed.  Given the challenges that the US Postal Service and the IRS are both facing with backlogs, this is the time to commit to electronic filing, direct deposit, and online payment options.  Visit this IRS webpage for additional updates regarding their mission-critical functions and answers to related frequently asked questions.  https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue 

Taxpayers who have balances due are encouraged to pay online or via direct debit.  It is simple to pay online at the IRS website, and most states also have pay online options.  Visit our page at https://www.tgccpa.com/payment-links/ for a central listing of official online payment links for the IRS, Virginia, Maryland, and DC.  There you will also find additional guidance to assist in the online payment process.  Taxpayers can also visit each of the respective agencies’ webpages.  Some taxing authorities do require registration before you can make your first online payment.

IRS: https://www.irs.gov/payments

Virginia: https://www.tax.virginia.gov/

District of Columbia: https://mytax.dc.gov/

Maryland (Individuals): https://www.marylandtaxes.gov/individual/tax-compliance/pay-it.php Maryland (Businesses): https://interactive.marylandtaxes.gov/bServices/BillPay/Default.aspx

© 2021

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Written by: Erin Kidd, EA

Erin Kidd is the Tax Individual Practice Supervisor at Thompson Greenspon and has nearly a decade of tax experience specializing in individual taxation. Throughout her career, she has focused on simplifying complex tax issues and educating clients to maximize their tax benefits and plan for future events. Erin is responsible for the review of individual Federal and multi-state tax returns, managing the firm’s Military Spouse Remote Preparer Program, preparation of individual tax returns with international taxation and reporting requirements, and assisting with the resolution of client issues with Federal and State Taxing Authorities. 

Erin holds a Bachelor’s and Master’s Degree in Business Administration from Morehead State University, is an Enrolled Agent, a federally licensed tax preparer who has unlimited rights to practice before the IRS, and an Accredited Financial Counselor ®. She has been recognized by the Garrison Commands of West Point, NY and Fort Leavenworth, KS for her contributions to the military community for her work with the installations’ Volunteer Income Tax Assistance Centers.