True to Form

Larry Sayler

IS THE IRS NO LONGER able to provide basic services to the public?

When my father passed away, he left his financial assets in a trust for my siblings and me. A trust is a good estate planning tool, but there are some disadvantages. Among them: A trust has to file its own income tax forms.

My mother is the trustee. She uses a local CPA to prepare the tax returns for the trust. My mother recently received a letter from the IRS.

“Thank you for your inquiry dated Aug. 06, 2020. We have processed the adjustment indicated on your amended Form 1041 and applied the payment of $108.00, which we received on Aug. 14, 2020, to the Form 1041 account tax period ending Dec. 31, 2019. The above referenced tax period is paid in full at this time.”

That’s not a typographical error: The IRS is informing my mother that it received a check she sent nearly two years ago.

In August 2020, my mother sent the IRS an amended Form 1041, which is the tax return for trusts, along with a check for $108. Three months later, in November 2020, the check finally cleared the bank. Yes, it took the IRS three months to open the mail and deposit her check. My mother’s CPA tells me that the letter is simply an acknowledgment from the IRS that it has now processed and accepted the amended return.

End of story? A few weeks later, my mother received a second letter about the Form 1041 from the IRS. It states, “We are required by law to charge interest when you do not pay your liability on time.” It informs her that the interest charge is 27 cents. But then it says, in bold, “Amount due: $0.00.” I assume that means she does not have to pay the 27 cents, but I wish the letter would explicitly say that. You’ve got to wonder: How much did it cost the IRS to prepare and send a letter to my mother telling her that she doesn’t owe anything?

The IRS claims the significant backlog of unprocessed returns is the result of the pandemic and chronic underfunding. But I’d add another reason—something beyond the IRS’s control—which is the ever-increasing complexity of the tax code and tax forms. Call me cynical, but I believe the No. 1 goal of most elected officials is to get reelected. They want to “help” us so they can trumpet their compassion to their constituency. Every time Congress passes tax legislation to “help” us, the tax code and tax forms become more complex.

In my humble opinion, there’s no acceptable excuse for processing tax returns nearly two years after they’ve been submitted. I don’t have any solutions. But I do wonder, is the U.S. spiraling downward? Are we becoming like a third-world country whose government is unable to provide basic services in a timely manner?

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