Michele Treacy and family with her late father Col. Lester Marlon Romine
Courtesy of: Michele Treacy
Michele Treacy lost her father at the beginning of the pandemic. However, a delayed tax refund has prolonged the grief she and her family are feeling and has prevented them from reaching a deal.
Treacy’s father, Col. Lester Romine, 91, passed away in early March 2020. Since he had appointed Treacy, 57, as his executor, she filed his tax return on paper in July 2020 on time.
She and her three siblings were eager to get his federal refund of $ 2,300 to finalize and close his estate, but Treacy is still working with her attorney over a year later.
“I made a promise to my father before he died that I would take care of it,” said Treacy, who lives in Kinnelon, New Jersey. “I try to honor his legacy and my promise to him.”
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Treacy’s family is one of the millions with late tax refunds this year.
By the end of the 2021 tax returns season, the IRS had processed 135.8 million tax returns, up from 145.5 million the previous year, according to Taxpayer Advocate Service, an independent bureau within the IRS.
Part of the backlog was caused by the high volume of incentive returns and other credits that require manual verification, the Taxpayer Advocate Service reported.
However, according to the IRS, there were still 10.1 million unprocessed individual returns as of August 20. The agency’s website states that it can take up to 120 days to process returns that require “special treatment” from an employee.
“It’s been very frustrating for our customers,” said Larry Harris, a certified financial planner and director of tax services at Parsec Financial in Asheville, North Carolina.
These issues are common when there is a definitive tax return with a refund, he said.
While the final declarations for the deceased can follow the same process as for living taxpayers, there is an additional step when a deceased taxpayer receives a refund. This is because these returns include Form 1310 which must be submitted on paper, which adds further delays.
“These situations create a lot of anxiety among customers waiting for a refund to close the property,” added Harris.
Although many IRS offices were closed due to Covid-19, Treacy called about once a month. However, she received little information about her father’s pending refund and eventually filed a complaint with the Taxpayer Advocate Service.
Even so, there were no updates even after checking the status through the “Where’s My Refund” tool.
With millions overdue refunds, usage of the IRS tool rose to more than 483 million by May 2021, according to the Taxpayer Advocate Service’s semi-annual report. However, many taxpayers have not been able to get any information about when to expect their refund or what caused the delay.
I think it’s fair to say that this is a crisis that really needs some attention.
Larry Harris
Director of Tax Services at Parsec Financial
Additionally, the IRS received a record number of phone calls – more than 167 million during the 2021 filing season – and only 7% of taxpayers reached an agent, according to the same report.
“I think it’s fair to say this is a crisis that really needs some attention,” said Harris.
The IRS did not immediately respond to a request for comment.
Since 2010, IRS funding has been cut by 19%, according to the Center on Budget and Policy Priorities.
According to its fiscal 2020 report, the agency lost more than 33,378 full-time employees between 2010 and 2020, and although it has increased its workforce since 2019, the workforce has remained below 2010 levels.
President Joe Biden asked for $ 80 billion in IRS funding over the next decade to fight tax evasion. However, the Senate dropped a $ 40 billion proposal from the infrastructure bill after Republicans rejected it.
Although the Senate’s budget resolution framework mentions balancing out “IRS tax enforcement,” it is unclear whether lawmakers will sign the billions in funding proposed by Biden.
Find closure
After consulting her personal accountant, Treacy eventually learned that her father’s refund had been classified as a fraud due to concerns about identity theft.
It’s a common problem for estates, said Mary Kay Foss, a certified chartered accountant and faculty of CPA for the CalCPA Education Foundation in Walnut Creek, California.
“With a property [the IRS] can’t talk to the deceased, “she said.” And when dealing with third parties they seem to have been very careful. ”
Even though Treacy had submitted the required forms, like her father’s death certificate, trusteeship, and more, she had to visit her local Taxpayer Assistance Center to re-submit paperwork, verify her identity, and prove she was the executor.
Two weeks after her second visit, Treacy was delighted to receive the $ 2,300 refund check in the mail.
“I think the three hours I spent on taxpayer assistance helped me,” Treacy said in an email.
With the refund in hand, she said, she finally reached the final step in the process: working with a lawyer to close her father’s estate.
One of the problems with prolonged estate closings is that the deceased’s assets can generate income. If the estate exceeds a certain threshold, the family may need to file another tax return, Foss said.
Because the IRS pays interest on late refunds, it may take some discounts above the threshold depending on the level of return.
However, Treacy has spoken to her lawyer and believes the interest on her father’s return could be below the minimum.
“It’s a bit like the last nagging piece of 2020,” said Treacy. “I think when we do that we can put this in the rearview mirror once and for all.”
With so many casualties during the pandemic, she fears other families may face similar challenges but urges them not to give up.
“The squeaky wheel gets the fat,” she said. “Call once a week to see where your refund is and respond to requests for any required forms or ID in a timely manner.”
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