Amid Chaos, IRS Attempts A Return To Normal

E-filing of individual tax returns for the 2022 filing season opens on January 24. The start of e-filing and the April tax filing deadline return to an almost normal schedule while ongoing issues make filing season realities hard to predict.

In 2021 individual e-filing didn’t open until February 12. In 2020 it opened on January 27. This year’s opening appears to be moving the needle back toward the more normal mid-January opening. The April 18th filing deadline is also a return to normal after the July 17, 2020 and May 17, 2021 extended deadlines. Friday, April 15, 2022 is the Emancipation Day holiday in Washington, D.C. which is why the deadline has been moved forward to Monday April 18. It almost seems normal. Almost.

While the start and finish lines to filing season 2022 have a whiff of normalcy about them, everything in between stinks. It stinks of expectations bordering on the delusional and it stinks of IRS rot. When it comes to considering “known unknowns” such as the effects of reconciling economic impact payments (stimulus money) and advance payments of the Child Tax Credit (CTC), the IRS doesn’t seem delusional.

The Commissioner is taking every chance he is offered to urge taxpayers and tax practitioners to file accurately and electronically. The IRS is using every channel it has to remind taxpayers to watch for Letters 6419 and 6475 (which provide the amounts of the advance CTC payments and EIPs, respectively). It’s the Commissioner’s apparent failure to consider the “unknown unknowns” that reeks of delusion.

While the IRS Commissioner (in a recent statement) and the National Taxpayer Advocate (in her most recent report) have been open about anticipating another difficult filing season, they have not seemed to consider the potential for natural disasters to create yet another patchwork of filing deadlines. In 2021 the May 17th deadline wasn’t the deadline for Texas, Oklahoma, and Louisiana due to winter storms.

Louisiana’s deadline was re-adjusted after Hurricane Ida. In late April 2021 the May 17, 2021 deadline was extended for some Kentucky counties due to storm effects and the list of affected counties continued to be adjusted until June 28, 2021 (two days before the extended June 30 filing deadline). At the end of April 2021 Alabama taxpayers got an extension until August 2. In September New York and New Jersey got their deadline extended because of Hurricane Ida. That’s just a sample; the list goes on.

The other unknown unknown the Commissioner has failed to consider is the ongoing effects of the pandemic. His statement was issued January 10, 2022 amid the omicron variant surge. At this time it is unclear if that surge has peaked and it is even more unclear what effects the current surge will have on IRS staffing levels during filing season. Whatever the effects are, it is unlikely they will improve return processing or response times.

It’s early January 2022. It’s unlikely that the pace of natural disasters will abate and predicting pandemic surges has proved elusive, so why not plan for the worst and issue a pre-emptive extension of the filing deadline until July? Early filers will still file early. Procrastinators will still procrastinate. Extending the deadline until mid-year would simply mitigate some of the confusion resulting from yet another reactive patchwork of federal deadlines due to yet another bad weather year or more Covid-related staffing issues.

And then there’s the rot. Yes, the IRS has been underfunded for years. Yes, experienced people retired and because of funding cuts, they were never replaced. Yes Congress continues to ask the IRS to do more with less. But at some point the IRS needs to acknowledge certain systemic failures in its procedures and possibly its culture.

One such systemic failure was the continuation of automated notice processing despite the mail and phone backlog. Taxpayers and tax practitioners continue to receive second and third notices, each more aggressive than the last, about issues that were addressed by a mailed response to the first notice that has remained either unopened or unprocessed by the IRS. That’s a procedural failure.

The cultural failure is the idea that temporarily stopping automated notices or providing some sort of blanket penalty relief or temporarily giving more experienced customer service reps (or their supervisors) more autonomy to abate penalties until the IRS clears its mail backlog is some sort of abject moral failing that will result in massive taxpayer noncompliance. It’s the idea that cutting taxpayers some slack in the middle of yet another chaotic filing season will turn otherwise law abiding taxpayers into tax protesting scofflaws.

It’s the idea that their kindness will be considered weakness. Perhaps that is the case, but the fact of the matter is that our tax system is based on voluntary compliance and the complete inability to get assistance when trying to comply voluntarily with one’s tax obligations or exercise one’s rights under the tax laws could be as much (or more) of a disincentive to compliance as lack of enforcement. Unfortunately, heading into the third filing season under pandemic rules it seems we have yet to find rock bottom and a path out of this abyss.

Follow me on Twitter.

I own Tax Therapy, LLC, in Albuquerque, New Mexico. I am an Enrolled Agent and non-attorney practitioner admitted to the bar of the U.S. Tax Court. I work as a tax general practitioner preparing returns for individuals and (really) small businesses as well as representing individuals before the IRS and, occasionally, the U.S. Tax Court. My passion is translating “taxspeak” into English for taxpayers and tax practitioners. I write to dispel myths with facts and to explain “the fine print” behind seemingly simple tax concepts. I cover individual tax issues and IRS developments with a focus on items of interest to taxpayers and retail tax practitioners. Follow me on Twitter @taxtherapist505

Source: Amid Chaos, IRS Attempts A Return To Normal


More contents:

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IRS Announces 2022 Tax Rates, Standard Deduction Amounts And More

Medicare Part B Premiums Rise 14.5% In 2022

Internal Revenue Service (IRS) Publication 15, which includes withholding tables for income tax. State requirements vary by state; for an example, see the New York state portal for withholding tax.

Canada Revenue Agency Publication T4001. Canada Revenue Agency also provides significant online guidance accessible through a web index, including an online payroll tax calculator.

IRS Form W-4.

HM Revenue and Customs (HMRC) PAYE for employers: the basics

PAYG withholding web page for details and tools.

Deposit Interest Retention Tax.

26 USC 3406, Backup Withholding.

Dividend Allowance factsheet HMRC, 17 August 2015

PwC Global Tax Summaries: Rwanda, Corporate – Withholding taxes”. 26 July 2018.

5 Deadly Sins That Can Wreck Your Franchise – and How to Avoid Them

The food and beverage industry is a tough game. Sixty percent of restaurants don’t make it past their first year, and 80 percent go out of business within five years. Those are hard odds.

Franchising takes some of the risks out of the equation by giving you a proven model to work with. But being a franchisor with a proven model under your arm doesn’t mean you’re suddenly bulletproof or immune to the laws of economics. If you start making unforced errors, you’re going to fail.

Here are the five reasons most people fail as the owner of a franchise. Avoid these deadly sins at all costs:

Sin 1: Financial complacency

In your personal life, you likely take a hands-on approach to finances. Your business requires the same attention. Don’t get complacent, and don’t assume that just because money is coming in, you can set-it-and-forget-it. Dig into the financials.

Related: Wild for Animals? Check Out the Top 6 Franchises for Pet Lovers

You might have top-line revenue of $900,000, but are your labor margins higher than they should be? Is your cost of goods (COGS) steadily increasing because your bar manager bought 50 different types of wine because you don’t have an inventory system that can keep track of what brands you already have on hand? Maybe you haven’t done a request for price (RFP) in more than five years, so you don’t even know if there’s a competitive supply that could be saving you money.

Don’t let this kind of complacency set in. It can chip away at that top line until suddenly, the bottom line isn’t looking so hot.

Sin 2: Operational obtuseness

You need to know your business inside and out. This doesn’t just mean knowing your COGS and SKUs, it means knowing how the business operates, and how to recognize if something’s off. If cost of goods is supposed to be 23% but it’s showing 40%, or if there’s variance in inventory, you need to know exactly where to look to find the discrepancy.

Is this your first franchise? If so, it’s a good idea to know how to operationally run every aspect of the business. Sure, you might not need to be washing dishes, slinging drinks, or ordering paper towels during normal day-to-day operations, but if someone calls in sick or just doesn’t show up, you need to be able to jump in and keep the machine rolling. The take-home message here? It pays to know your business’ operations inside and out.

Sin 3: Poor hiring choices

This next tidbit might seem obvious but, surprisingly, it bears mentioning: Hire good people. This is your business. You want it to succeed, which means you should hire the absolute best people to run it. Don’t hire the first person who applies for the job that passes a background check and has a pulse.

Related: What Restaurant Franchising Will Look Like in 2021

Also: Hire for your weaknesses. If you are an introverted, detail-oriented person who’s comfortable with the behind the scenes aspects, make sure you hire someone who has more of an extroverted, front-of-house personality. If you’re a big picture, ideas person, hire someone who’s a “let’s get things done” person, and so on. Hire people that will complement what you bring to the business with what they bring to the business.

Sin 4: Myopic risk management

Beyond having contingency plans in place in the event of a natural disaster, a pandemic, a supply chain disruption, or some other issue, franchisees need to be like chess players. They need to see the entire board, think multiple moves ahead, and imagine multiple possible scenarios that might come to pass.

An impact on a seemingly unrelated industry can have a domino effect that ripples through industries B and C and whacks you upside the head, even though you’re in industry D. In practical terms, this means that if you’re a hot dog vendor, and you’re only concerned about what affects the hot dog and the bun, you’re not thinking broadly enough. Expanding your field of vision will help you better anticipate unexpected curveballs so that you can pivot and adapt.

Sin 5: Mediocre offerings 

Do yourself a favor, and do at least one thing better than other people. You’ve got to have at least one thing that crushes it, whether that’s a particular menu item, your customer service, your ambiance, or something else. That special something is how you get customers and keep them coming back.

Put another way: Know what you do well and execute on it. If onion rings are your thing, sell the world’s best onion rings. If a killer beer selection is your calling card, make sure you’re stocked to the nines. But don’t try to be all things to people if it means doing everything “average.”

Related: The Top Food Franchises of the Year

Failures do occur in the food and beverage industry, but they don’t have to be inevitable. By avoiding these five deadly sins, franchisees can keep their businesses on the up-and-up and in the black, so that they can successfully reap the rewards of their investment.

By: Danny Cattan and James Vitrano Director Of Franchise Development

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