When last we left the saga of my client and his tax year 2020 refund, we were waiting for a call from the Taxpayer Advocate Office. Well, we received the callback and my client’s refund check was issued last Friday. Post Office willing, it should reach him in Arkansas sometime this week.
As for the Taxpayer Advocate, once I spoke with them they were (as I’ve found in the past) extremely helpful in getting this resolved. Indeed, I don’t think this could have been resolved without their assistance. It turns out that my client’s return needed two special processes run in order to be processed and the refund issued. That took about three months (once the Taxpayer Advocate Office was involved). Unfortunately, all of us (as taxpayers) are paying for this: my client is receiving nearly $5,000 of interest on his refund.
Let’s examine how this could have been prevented:
1. The IRS could have had better instructions on verifying your identity. When my client verified his identity with ID.me, he thought he had completed the process; after all, he had verified his identity. My client was not alone in this; the IRS later changed the instructions about verifying your identity to note that you still need to verify your identity with the IRS.
2. Follow-up Letters from the Identity Protection Unit. The IRS should send out a second letter six months after the first letter to those who have not yet verified their identity. My client likely would have called or messaged me about this, and I would have let him know that he did have to go through the verification process with the IRS.
3. More IRS employees trained and working at the Identity Protection Unit. Calling the IRS’s Identity Protection Unit is a saga in itself; too many times you will get the message, “We’re sorry, but due to extremely high call volume in the topic you’ve chosen we cannot take your call at this time. Goodbye.”
4. Better training of Identity Protection Unit employees. As noted in Part 3, many of these employees seem to regard tax professionals with POAs as non-persons.
5. The IRS should send letters from the Identity Protection Unit to IRS Power of Attorney (and Tax Information Authorization) representatives–especially for those who reside outside the United States. Mail in the US is generally reliable; mail outside the United States can be hit and miss (or miss and miss). A client of mine living in Central America recently received an Identity Protection Unit letter; it only took seven months to get to her. As a reminder to the IRS, the taxpayer in this situation has authorized his or her tax professional to be notified (and, in the case of a Power of Attorney, to act on behalf of the taxpayer). The IRS’s refusal to copy tax professionals on Identity Protection Unit letters is a major cause of problems.
6. Better IRS computer systems. This is not something that the IRS can really control, but hopefully the computer improvements that are coming will assist in this area (it certainly can’t hurt).
7. Acknowledgments and more realistic time-frames from the Taxpayer Advocate Office. The representative I dealt with is buried; he told me that the four months it took for him to get to my client’s case was “typical.” The intake individuals at the Advocate need to be aware of this and communicate this to people who are obtaining the Advocate’s services.
Finally, let’s consider Joe and Mary Doe. As I wrote in part 4,
They desperately need their $20,000 tax refund…and they’re stuck in limbo. If they did exactly what Mr. Smith did, they would have done everything correctly…and be stuck in limbo. If you wonder why there’s frustration with the IRS, and why members of Congress have IRS liaisons, look no further.
I wish I could tell you with certainty that things with the Identity Protection Unit will improve in the future. I think they will, but some of these issues appear systemic; it will take top-down changes at the IRS to cause improvements in this area. We can always hope.
Previous posts on this:
An Identity Protection Unit Saga: Part 1
An Identity Protection Unit Saga: Part 2
An Identity Protection Unit Saga: Part 3
An Identity Protection Unit Saga: Part 4
An Identity Protection Unit Saga: Part 5