A large number of errors made by taxpayers is hurting the IRS with its inventory of unprocessed tax returns. The backlog is mostly paper-filed returns and is dominated by errors relating to Economic Impact Payments (EIPs). On more than 10 million returns filed in 2021, taxpayers “failed to properly reconcile” the two 2020 EIPs with the amount of the Recovery Rebate Credit, said IRS Commissioner Charles Rettig. Also, many taxpayers improperly reported unemployment compensation for 2020. Large numbers of paper returns “can result in significant delays, contributing to IRS inventories,” Rettig said. Plus, many taxpayers are unaware of the status of their unprocessed returns.
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