True to Form
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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