5 things to know about the tax filing deadline

With less than a week left until the April 15 tax filing deadline, we are approaching a pivotal time for the U.S. tax administration, with the IRS receiving a major funding boost and making major changes, giving Americans new ways to pay their taxes. is provided.

As of March 29, the IRS had received more than 90.3 million tax returns, and this year’s metrics are trending higher overall compared to last year.

According to IRS statistics, the number of returns received by the IRS increased by 0.2% compared to the same period last year, and returns filed digitally increased by 0.3%.

Notably, overall usage of the IRS website has increased significantly by 18.3%, continuing the trend of increasing digitization in the tax field.

Self-prepared digital returns increased by 1.1% year-over-year, while professionally-prepared online returns decreased by 0.5% year-over-year.

As more people file their returns online, they rely less on professional tax preparers to file their returns, according to a recent analysis by The Hill of IRS data books from the past 10 years. found.

Here are five things you need to know about this tax season ahead of the April 15 deadline.

IRS services are improving after the pandemic crisis

Compared to recent years, IRS phone wait times are down, productivity is up, and the backlog of tax returns that hit the agency hard in the wake of the pandemic has been reduced, the government audit finds. This was made clear in a recent report by the United Nations General Assembly (GAO). .

According to GAO’s 2023 tax filing report released in February, average call wait times will drop from 28 in 2022 to 3 minutes in the 2023 filing season, and the IRS reported 65% more calls last year than the year before. responded.

The agency is also working on backlogged tax returns.

“By the end of the last filing season, the IRS had processed nearly all 2022 returns, leaving 6.1 million unprocessed returns, 10.3 million fewer than at the same point last year. ” GAO reported.

By comparison, there were 16.5 million unprocessed tax returns in December 2020.

While the IRS is moving in the right direction regarding the backlog, both GAO and the Treasury Inspector General for Tax Administration (TIGTA) say the IRS is not yet back to pre-pandemic standards in all areas.

“Concerns remain that the inventory of outstanding amended tax returns remains significantly above pre-pandemic levels,” TIGTA, another government watchdog, said in a March report.

Beware of tax scams and malicious advice

As tax filing has become more online over the past few decades, tax fraud has proliferated across cyberspace.

Some of these are carried out by outright scammers in the form of fake text messages and emails, while others occupy the gray area of ​​shady advertisements and self-serving business advice.

TIGTA periodically reminds taxpayers that the IRS will not contact taxpayers by telephone or request payment using gift cards, prepaid debit cards, money orders, or wire transfers. I am. Additionally, the agency will not request personal or financial information via email, text, letter, or social media.

Enforcement agencies are targeting automated scams that keep taxpayers in the loop, and one recent action by the Federal Communications Commission (FCC) is against a bogus robocall campaign by Veriwave Telco known as the “National Tax Relief Program.” It is something.

“There were approximately 15.8 million calls playing prerecorded messages about the ‘National Tax Relief Program.’ The Bureau found no evidence that the program actually exists,” the FCC said in a release Friday.

Social media influencers offering unsound tax advice is also causing problems this tax season.

“The IRS is aware of various filing season hashtags and social media topics that lead to inaccurate and potentially fraudulent information,” the agency said in a release Monday. “A central theme in these examples involves people attempting to use legitimate tax forms for the wrong reasons.”

Research shows that bad financial advice originating from social media extends beyond the realm of taxes and into other areas of financial planning. 1 paper from University of California in 2023 And the Swiss Institute of Finance classified the majority of financial social media influencers as having “negative skills” when providing online advice.

Direct File is the new way to file your taxes online

A new free online tax filing tool will be available this year as part of a pilot program that allows taxpayers to file directly on the IRS website.

The pilot, known as Direct File, is available in 12 states, including New York, California, Texas, Florida and Washington, and can provide taxpayers with recommendations on the best way to fill out their returns.

The IRS on Tuesday announced a new feature in its Direct File service that allows taxpayers to withdraw their adjusted gross income from the previous year. Treasury officials said the IRS examined users’ first tranches and found that income estimates were common errors, and the new feature would help correct those mistakes.

“This important update allows Direct File users to leverage information the IRS already has to further simplify the filing process,” IRS Direct File Director Bridget Roberts said in a statement. Stated.

The program has so far been rolled out smoothly with no major technical issues reported, but GAO said Tuesday that there is uncertainty in the program’s cost estimates and that the IRS is not adequately documenting costs. He pointed out that there is a possibility.

Watchdog agencies GAO and TIGTA “found that the IRS does not have documentation to support the underlying data, analysis, or assumptions used in direct file cost estimates.”

Tax offices begin lobbying activities as direct tax returns increase

With the IRS offering the first free direct online filing tool, private tax professionals are lobbying hard for their products.

An analysis by a political funding watchdog open secret We found that Intuit, the maker of the popular tax preparation software Turbo Tax, “set a new corporate record on federal lobbying in 2023, spending nearly $3.8 million on federal lobbying, more than any previous year.”

Senate lobbying disclosure Intuit said it spent $960,000 petitioning government authorities between October and December to, among other things, “assist in protecting intellectual property.”

“We know that Turbo Tax did not create a monopoly on tax filing overnight. The success of the rollout of direct filing will pave the way for future expansion of a free and simplified public option for filing taxes. “This creates a solid foundation for the future,” Adam Reuben, a political strategist at the advocacy group Economic Security Project, said in a statement to The Hill.

Regular operating expenses suck up IRS overhaul funds.

The launch of Direct File is part of a multifaceted overhaul of the IRS currently underway following a $78 billion increase in the IRS budget over the next 10 years passed as part of Democrats’ Inflation Control Act of 2022 (IRA). It’s just one feature.

According to recent TIGTA findings, the IRS has spent $4.4 billion, or 5.6% of IRA funds, to date, with nearly half of that going to supplementing the agency’s 2023 budget and offloading regular operating expenses. It was not enough to cover the costs. Addressed to IRS officials cited by TIGTA.

This boost is aimed at strengthening auditing and enforcement, modernizing operations, expanding taxpayer services, and modernizing technology.

The bulk of the allocations made to date have been the taxpayer services portion of the new funding, with more than a third of that spent in the first year.

Only 1 percent of the new enforcement funds have been spent, the largest single tranche of funds of more than $44 billion. Enhanced enforcement will require hiring skilled auditors, which experts say will take time. He spent 21% of his $4.8 billion set aside for technology updates.

New reversals in recent government funding battles after nearly a quarter of funds were returned as the IRS leverages funding grants to keep the lights on and employees on the payroll. No announcement has been made, and the Republican fight to have the funding rescinded has been paused. Last year in the form of regular expenses.